Wednesday, August 25, 2010

The Full Incredible Dimensions of the Sovereign Debt Crisis: Morgan Stanley Let's It Rip

The most truthful, well reasoned report, from inside elite Wall Street, that I have ever seen has just been issued  by  Arnaud Mares of Morgan Stanley. In the stunning report, he makes the following observations:

1. Governments will default. It is only a matter of how and when.

2. "Financial Oppression" may occur: Imposing below market interest rates on creditors.

3. The sovereign debt crisis is not simply European, it is global.

4. It is not GDP but government revenues that matter.

5. Seen from the angle of government revenues, the U.S. does not compare favorably with Europe.

6. The fiscal challenge is unprecedented.

7. The interest of bondholders in no longer aligned with that of the most powerful constituency (The elderly)

Bottom line: This is not the time to be holding government debt (U.S. Treasury securities included)

Read the full report below:

MS Default

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