Thursday, September 2, 2010

Monetary Fund Warns G-7 on Debt Levels

New York Times
September 1, 2010

The world’s most developed economies, which have been racking up spending since the mid-1960s, face record levels of debt as a result of the 2008-9 financial crisis and have little room for maneuver, the International Monetary Fund warned on Wednesday.

Despite the stark warning and the prospect that the wealthiest nations face years of belt-tightening, the fund also said that the risk of default by heavily indebted European countries like Greece, Ireland and Portugal had been significantly overestimated.

In three new research papers, the fund’s economists offered stern admonitions while cautioning against an overreaction.


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