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To: Tenchusatsu who wrote (575190)	7/7/2010 9:40:05 AM
From: Brumar89	Read Replies (2) \| Respond to of 1571051

Niall Ferguson: Nothing Would Scare Bond Markets More Than The Government Following Paul Krugman's Advice Gregory White \| Jul. 6, 2010, 10:46 AM \| 3,029 \| 25 Niall Ferguson of Harvard University spoke with Bloomberg Television on the subject of bond markets and the threat of a speculative bond attack against the United States. • 0:35 Bond vigilantes are similar to those who were shorting invest banks a few years ago. They will keep climbing the quality of countries, similar to how they did with banks. • 1:35 There is no example in history of any country growing out of this sort of debt position, except for Britain in the early 1800s, which had empire and industrial revolution on its side. • 2:10 What is worrying is that there is no inflation, which is the easy way out of this sort of financial situation. Default now seems the only escape, and the U.S. may choose that path with unfunded liabilities like Social Security. • 3:00 Nothing would scare the market more than if the government followed Paul Krugman's call for more stimulus. Read more: businessinsider.com businessinsider.com Niall Ferguson: The US Has 6 Years Before Debt Payments Surpass Defense Spending Joe Weisenthal \| Jul. 6, 2010, 4:51 AM \| 2,531 \| 6 The world's hottest deficit hawk Niall Ferguson brought his message of fiscal doom & gloom to the Aspen Ideas Festival, where he warned that politicians were lacking urgency over the crisis to come. The Aspen Times reports: And American politicians don't have a sense of urgency, Ferguson contended. They feel the country can limp along for another 20 years or so in its current financial health without making tough decisions about fiscal policy. He believes they are wrong. The federal government's debt has grown so large in the past decade that the United States will inevitably devote an increasing amount of taxes to it. Meanwhile it's facing a greater burden through the Medicare and Social Security programs as Baby Boomers age. It's also currently fighting two wars. All that while revenues have plummeted in the recession. “If you really want to see when an empire is getting vulnerable, the big giveaway is when the costs of serving the debt exceed the cost of the defense budget,” Ferguson said. That will happen in the United States within the next six years, he predicted. He also warned that the US economy could unravel very quickly, a la the Soviet Union, and that there was no reason to presume it would sink slowly into the mire. Meanwhile, Ferguson's unofficial adversary Paul Krugman has a post up about interest payments in debt-heavy Japan, in which he argues that the country's debt service isn't as high as people seem to think. Worth a quick read. Read more: businessinsider.com businessinsider.com