The governments of every advanced economy will eventually default on their sovereign debts, including the U.S., the U.K. and Western Europe, Marc Faber, publisher of the Gloom Boom & Doom Report, told CNBC.
According to Faber, the main problem comes down to two major issues: ballooning debts and future interest costs.
CNBC: “In the developed world we have huge debt to GDP, in terms of government debt to GDP and unfunded liabilities that will come due,” Faber said in a live interview via telephone. “These unfunded liabilities are so huge that eventually these governments will all have to print money before they default.”
Faber has always maintained that considering the fact there is so much event risk looming next few quarters for the Eurozone and its currency, that it is difficult to discern what the primary fundamental driver for the Euro, one of the world’s most liquid currency, will be.
Faber’s comments come amid talks of a possible rescue for struggling Euro zone member Greece, which needs to borrow 53 billion euros to cover its deficit and refinance debt that is coming due. But investors seem reluctant for the time being over the risks involved in buying Greek bonds. Needless to say, a default would have far-reaching repercussions for the euro.
If the West default on their debt, it will be a sad day indeed. What will be used for foreign trade? Will foreign trade collapse? What about US savings bonds sold to US citizens?
The West will tighten its belts and bites the bullet. It will not and can not default on its debt!
The US or the UK will not default on its debt at all. Marc Faber’s assertion that we will is totally absurd. Both the US & UK can print their own money and they will do so. The USA did it somewhat after WWII to pay down the debt and we will do it again.
Individual Euro-zone economies could indeed default because they do not control the value of the EURO. But if France or Germany ever came close to default, the Euro-zone would start inflating their way out of debt as well.