It’s Impossible For DM Governments To Grow Their Way Back To Solvency

via: ZeroHedge
by: Tyler Durden
July 25, 2012

Tyler Durden's picture
While it might seem like somewhat stating the obvious, it is nonetheless worth driving home to the politicians and public policy wonks who see rates at record lows and perceive a Keynesian borrow-and-spend-fest as once again the solution to borrowing-and-spending too much. As Morgan Stanley puts it,fiscal policy is sailing between the Scylla of chase-your-tail austerity and the Charybdis of sovereign insolvency. In short, it is impossible for governments to grow their way back to solvency. Doing nothing would sail governments towards the whirlpool of national insolvency – at some stage. But avoiding insolvency would risk being monstered by recession. If ‘expansionary austerity’ worked, then Europe would now be booming. The outlook for fiscal policy and public sector finances is a major uncertainty for investors and, critically, is part of the reason why risky assets are being de-rated and ‘safe’ assets are at unprecedented valuations

.Continue Reading At: ZeroHedge.com

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