Groundviews had published an analysis on the election. I wrote this as a comment:
The
problem, which the business community and anyone else who argues for
continuity has ignored is the state of the public finances.
We
have an unsustainable level of public expenditure, which is being funded
largely by foreign borrowings. Thanks to a general slowness in the
economies of Europe and the US we have been able to raise debt at
reletively low rates, to finance our expenditure.
We cannot
expect such a benign situation in the debt markets to continue
indefinitely. Sooner or later interest rates will rise (as soon as the
US/EU cut back on quantitative easing) and we will then face a steep
rise in debt service costs, which will push us into the same debt trap
that Greece faces.
This is not just my view, it is
also the view of the IMF and the international rating agencies. Those
who want to continue on this path are advised to peer over the
cliff face, first.
No comments:
Post a Comment