Recently Professor Ken Rogoff, former chief economist for the IMF, warned that ballooning debts could cause “a bunch of sovereign defaults”.
He has also warned that China is in a bubble that will burst within 10 years, sparking a regional crisis.
In 2008 he correctly forewarned of the possibility of large bank failures in the USA.
Now his latest research offers very important insights for all Australians who believe the Rudd Labor “spin”, that our national debts are very low, and no cause for concern.
From the New York Times:
Professor Rogoff, who has spent most of his career studying global debt crises, has combed through several centuries’ worth of records with a fellow economist, Carmen M. Reinhart of the University of Maryland, looking for signs that a country was about to default.
One finding was that countries “can default on stunningly small amounts of debt,” he said, perhaps just one-fourth of what stopped Greece in its tracks. “The fact that the states’ debts aren’t as big as Greece’s doesn’t mean it can’t happen.”
Also, officials and their lenders often refused to admit they had a debt problem until too late.
“When an accident is waiting to happen, it eventually does,” the two economists wrote in their book, titled “This Time Is Different” — the words often on the lips of policy makers just before a debt bomb exploded.
Barnaby Joyce has been ridiculed up hill and down dale since late 2009, for daring to raise questions about the unbelievably huge US debt (see chart here), and Australia’s own ever-growing national debts.
Professor Rogoff’s research shows that even a debt that is only one-fourth of Greece’s can be enough to cause a sovereign default.
In December, Greece’s debt was $482bn.
Australia’s public debt is $131.682bn. And growing at around $2bn per fortnight.
Barnaby is right.
Barnaby Is Right 
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