Wednesday, May 13, 2009

Governments Will Need to Issue $15-33 Trillion in Bonds


Niels C. Jensen, a partner with Absolute Return Partners LLP, has written an interesting essay on the need of governments around the world to issue bonds to pay for their respective bailouts.

As summarized by Nouriel Roubini, Jensen shows:

The [IMF projects that the] twelve most industrialized of the world's G20 countries will have to issue about $10 trillion worth of new bonds to cover the cost of the current crisis. However, [well-known economists] Reinhart and Rogoff estimate the true cost at $15 trillion in the best case scenario and a whopping $33 trillion - 1/3 of total global savings - in the worst case. Issuing governments may have to inflate away their debt or pay drastically higher yields if deflation does not materialize

2 comments:

  1. RBM... inflation inflation inflation. Coming next year... the trillion dollar federal reserve note!

    ReplyDelete

→ Thank you for contributing to the conversation by commenting. We try to read all of the comments (but don't always have the time).

→ If you write a long comment, please use paragraph breaks. Otherwise, no one will read it. Many people still won't read it, so shorter is usually better (but it's your choice).

→ The following types of comments will be deleted if we happen to see them:

-- Comments that criticize any class of people as a whole, especially when based on an attribute they don't have control over

-- Comments that explicitly call for violence

→ Because we do not read all of the comments, I am not responsible for any unlawful or distasteful comments.