by Ambrose Evans-Pritchard at the UK Telegraph:
Much of the Western world will require defaults, a savings tax and higher
inflation to clear the way for recovery as debt levels reach a 200-year
high, according to a new report by the International Monetary Fund.
The IMF working paper said debt burdens in developed nations have become
extreme by any historical measure and will require a wave of haircuts,
either negotiated 1930s-style write-offs or the standard mix of measures
used by the IMF in its “toolkit” for emerging market blow-ups.
“The size of the problem suggests that restructurings will be needed, for
example, in the periphery of Europe, far beyond anything discussed in public
to this point,” said the paper, by Harvard professors Carmen Reinhart and
Kenneth Rogoff.
The paper said policy elites in the West are still clinging to the illusion
that rich countries are different from poorer regions and can therefore chip
away at their debts with a blend of austerity cuts, growth, and tinkering
(“forbearance”).
More here.
More here.
