Wednesday, August 25, 2010

Morgan Stanley Says
Government Defaults Inevitable

by Matthew Brown - August 25th, 2010 - Bloomberg News

Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.

“Governments will impose a loss on some of their stakeholders,” Arnaud Mares, an executive director at Morgan Stanley in London, wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.”

There were a couple of prescient articles back during the Presidential campaign of 2008 that predicted Obama would spend us into a Cloward-Piven crisis. Even when Rahm Emanuel publicly claimed that the Obama administration planned to create crises so they could take advantage of them, no one seemed to take the threat seriously. Last year when top economists predicted that the out of control spending of Obama would lead to a double dip recession, that could easily slip into depression, liberals mocked this as stupidity. FDR's Treasury Secretary noted that the New Deal was a failure, yet most Democrats have continued to insist ever since that it was not a failure. These same delusions are at work in defending the Obama disaster.

From the time they were elected up until this date, Obama and Biden continue to talk about a recovery that is an illusion. There are always up and down moves in any economic data. It is not a recovery until all signs are up. That has not happened despite the lies of Obama and Biden. A small number of indicators turned up. Unfortunately that did not include hiring by business. There has been no recovery. There has merely been a small lull in the disaster that Bush and Obama have created with their out of control spending. I agree this mess started under Bush but Obama has simply made it worse by his incredible excesses. The economy is starting to indicate it will slip down again. As noted above, some call this a double dip. Since we have not really gone up yet, I just call it the return of the downward slide caused by government tyranny.

In either event, America continues to be ruled by a 'redistribution of wealth' mentality that has always failed. It is still failing. Things are going to get much worse before they turn around.


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