Moody's Warns Debtor Nations to Beware "Social Unrest and Public Tension"
It sounds a bit out of the ordinary, but a credit rating agency, Moody’s, has stepped forward to warn leading industrialized nations like the US and Britain to be careful about where exorbitant debt can lead them. Yet it didn’t focus its caution on the financial perils of loose fiscal policy. Instead it explained that the biggest hurdle to restoring fiscal health could be social and political tension.
From the Telegraph:
“In a sombre report on the outlook for next year, the credit rating agency raised the prospect that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world.
“It said that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics. Signalling that a fiscal crisis remains a possibility for a leading economy, it said that 2010 would be a ‘tumultuous year for sovereign debt issuers’.
“…the main obstacle for fiscal consolidation plans would be signs not necessarily of economic strength but of ‘political and social tension’.”
Developed countries like Greece and Iceland have already seen riots in the streets due to economic challenges… and it would be best to see the US avoid that fate. Read more about the warning against sovereign debt and social unrest in the Telegraph.
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