Greece, Italy, Japan and Portugal are the advanced economies hovering closest to unsustainable levels of government debt, International Monetary Fund staff said in a research note today.
The four nations are most at risk of needing drastic budget cuts to avoiding facing uncontrollable increases in public debt because traditional budget cuts won’t suffice, IMF staff said in the paper. The U.S. and Spain are also constrained, the report said. Still, a separate IMF report said indicators of default risk by a wealthy economy reflect “some market overreaction.”
“Since behavior can change, a finding that a country has little or no fiscal space is not a prediction that public debt will explode or that the government will default -- history is not destiny -- but rather that something must change and fiscal policy cannot proceed on a ‘business as usual’ basis,” the economists wrote. “Specifically, fiscal policy will need to react more strongly to debt than past behavior would suggest.”
A história não é destino? Tem dias. Mais uma, e será a sexta bancarrota desde 1800. Esta será, porém, radicalmente diferente das anteriores: não só a dívida é integralmente denominada numa moeda que não é moeda própria, como não há... moeda própria. Este será o verdadeiro cabo das tormentas.
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