Word: debts
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...surest bet around. Reputation aside, however, politicians abuse their ability to borrow just like any spendthrift with too many credit cards, and often pile up more bills than they can handle. Argentina, Russia, Mexico and others have stiffed their bankers over the past 30 years. In fact, the sovereign-debt crisis goes back as far as the concept of the sovereign state. The first recorded government default took place in the 4th century B.C., when Greek municipalities failed to pay back loans granted by a temple. (Read "The Party's Over for Spendthrift Greeks...
...Perhaps, then, it's only fitting that Greek government debt is the biggest threat to global financial stability today. Warning that Greece was in "critical condition," Prime Minister George Papandreou recently said that his country "faces the risk of sinking under its debt." Jitters over a potential Greek default have punished the value of Europe's common currency, the euro, and driven down stock markets around the world. Policymakers worry that Greece's woes will spread to other weaker members of the euro zone, such as Portugal, Ireland, Italy and Spain - a collection of countries traders have nicknamed the PIIGS...
...right to be worried. The debacle in Greece could be a harbinger of a new stage of the financial crisis, one in which irresponsible politicians, not bankers, are the main source of economic turmoil. Across the developed world, sovereign states have amassed potentially unsustainable mountains of debt. The Organization for Economic Cooperation and Development (OECD) forecasts that by 2011 the ratio of government debt to gross domestic product - the main measure of a state's financial health - will reach 100% in the U.S., up from 62% in 2007. That's almost as large as Greece's burden today. Ireland...
...certain extent, mounting sovereign debt is a natural outcome of the recent recession. As in any downturn, tax revenues shrank but government spending increased to stimulate sagging economies. The result: budget deficits and more borrowing. Expensive banking-sector bailouts made the burden even heavier. That's not automatically dangerous. There is no particular level of debt that acts as a trip wire and tosses an economy into crisis. Different economies can bear different levels of government debt, depending on their ability - real or perceived - to finance it. While Greece's small and uncompetitive economy is struggling to stay afloat, Japan...
...want to remind the German people that they destroyed Greece in the Second World War," he said. "We haven't had a good life the last 40 or 50 years because of the war." Using a figure widely brandished in Greece as an estimate of Germany's war-related debt to the country, he called for Germany to "give us ?70 billion to pay us for the war. That would solve all our problems...