by Nouriel Roubini,
July 04 2014,
LIKE individuals, corporations and other private firms that rely on
bankruptcy procedures to reduce an excessive debt burden, countries
sometimes need orderly debt restructuring or reduction.
But the
continuing legal saga of Argentina’s fight with holdout creditors shows
that the international system for orderly sovereign-debt restructuring
may be broken.
Individuals, firms, or governments may end up with too much debt because of bad luck, bad decisions, or a combination.
If you get a mortgage but then lose your job, you have bad luck.
If
your debt becomes unsustainable because you borrowed too much to take
long vacations or buy expensive appliances, your bad behaviour is to
blame.
The same applies to corporate firms: some have bad luck and
their business plans fail, while others borrow too much to pay their
mediocre managers excessively.
Bad luck and bad behaviour
(policies) can also lead to unsustainable debt burdens for governments.
If a country’s terms of trade (the prices of its exports) deteriorate
and a recession persists for a long time, the government’s revenue base
may shrink and its debt burden may become excessive.
But an
unsustainable debt burden may also result from borrowing to spend too
much, failure to collect sufficient taxes, and other policies that
undermine the economy’s growth potential.
Read More @ http://www.bdlive.co.za/opinion/2014/07/04/debt-vultures-endanger-the-world
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics
NOURIEL ROUBINI BLOG tracks the media appearances of Dr Nouriel Roubini his interviews articles debates books news speeches conferences blogs etc..Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics
Showing posts with label Debt. Show all posts
Showing posts with label Debt. Show all posts
Friday, July 4, 2014
Tuesday, June 29, 2010
Saturday, June 26, 2010
Nassim Taleb : Explains How More Debt Will Not Help
Nassim's Principles :
Do not give an addict more drugs if he has with drawl pain
Nassim Taleb discusses principles that will help achieve a more robust financial system free of negative black swans. Giving an addict more drugs will not cure the addict, just as increasing the debt of an over-leveraged system will only prolong an even more severe economic meltdown. Unfortunately, the Administration is not listening to him.
Do not give an addict more drugs if he has with drawl pain
Nassim Taleb discusses principles that will help achieve a more robust financial system free of negative black swans. Giving an addict more drugs will not cure the addict, just as increasing the debt of an over-leveraged system will only prolong an even more severe economic meltdown. Unfortunately, the Administration is not listening to him.
Labels:
Debt,
Nassim Taleb
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