by Ambrose Evans-Pritchard: The
Death of Paper Money
The Great Recession
has dramatically shrunk the time left for the big AAA states to
prevent a full-blown sovereign debt crisis as their demographic
time-bomb threatens, US rating agency Moody’s has warned.
adverse debt dynamics were only expected to materialise in 15 to
20 years. The crisis has ‘fast-forwarded’ history, eroding all the
time available to adjust, " said the group’s quarterly Sovereign
US will crash through its safety buffer by 2013 if growth falters
(adverse scenario), with interest payments topping 14pc of tax revenues.
The debt-to-revenue ratio has already doubled in three years to
The US, UK,
Germany, France, and Spain are all at risk of an "interest
rate shock", either because they must roll over a cluster of
short-term debt (US, France, Spain) or because deficits are so large.
"fail to demonstrate the level of social cohesion required
to stabilise debt" will lose their AAA rating. "Intra-generational"
conflict between young and old requires careful handling. States
that delay pension reform risk spiralling downwards.