Thursday, June 11, 2009
"Debts Are Being Fought With Debts, Meaning That Not Only Banks But Entire Countries Could End Up Bankrupt."
Spiegel wrote in April:
Unlike 1929, the world's major countries are flooding the economy with money to prevent deflation and, with it, a downward spiral of declining prices and income.
But no one knows whether this will suffice, or whether all the money being thrown at the aggressive virus fueling this crisis will only make it worse. Debts are being fought with debts, meaning that not only banks but entire countries could end up bankrupt. Perhaps the efforts to combat the current crisis are merely laying the foundations for the next crisis, which will be bigger still.
Indeed, one of the world's leading economic historians - Harvard professor Niall Ferguson - recently warned of huge government debts threatening the solvency of entire nations:
"The idea that countries don't go bust is a joke... The debt trap may be about to spring ... for countries that have created large stimulus packages in order to stimulate their economies."