You Know Your Government Is in Trouble When…
by Chris Puplava, Financial Sense:
The Reinhart & Rogoff “BANG” moment is defined when confidence in a government collapses. No one can predict when that moment happens as bubbles can often go on longer than most would conceive possible, but when confidence is lost things unravel quickly. Below is an excerpt from the two authors describing the unraveling of confidence in the government when debt levels become unsustainable.
“Perhaps more than anything else, failure to recognize the precariousness and fickleness of confidence…is the key factor that gives rise to the this-time-is-different syndrome. Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when BANG!-confidence collapses, lenders disappear, and a crisis hits.”
I would say that Europe reached the “BANG” moment back in 2009 first with Greece and then the greater part of Europe in 2010. The “BANG” moment for Greece is clearly visible below in which its ratings were downgraded from “A-“ to “CCC” in just two years and 5-yr bond yields rose from below 5% to more than 60%!
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2012-11-11 12:27:52
Source: http://sgtreport.com/2012/11/you-know-your-government-is-in-trouble-when/
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