Public borrowing is costly these days, true, but interest rates on municipal bonds are still considerably lower than those borne by corporate debt.
Sentiment: NEGATIVE
Government bonds have basically been sold in the domestic market, so there is some sense of stability, but the amount of public debt is really severe... Japan must manage its finances with a sense of urgency.
It has always been more expensive for the poor to borrow money. We see this in everything from mortgage rates to credit cards.
To finance deficits, the government must sell bonds to investors, competing for capital that could otherwise be used to invest in stocks or corporate bonds. Government borrowings raise long-term interest rates, stifling economic growth.
Debt is a drag, a reality you may experience with every credit-card bill you open. But for a corporation or a government, it can be even more of a drag - on economic growth and job creation.
Worry is the interest paid by those who borrow trouble.
There's not a doubt in my mind that you will see a spate of municipal-bond defaults.
Total borrowing has imploded. Private borrowing has collapsed. And, in effect, the Treasury Department is the last borrower left standing.
The impact of low interest rates is broad and deep. Many Americans rely on interest income from their savings to help cover their cost of living.
Eurobonds are absolutely wrong. In order to bring about common interest rates, you need similar competitiveness levels, similar budget situations. You don't get them by collectivizing debts.
Municipal debt outstanding doubled in the past 10 years. And in the past 30 years, the U.S. has been in real economic nirvana.