The unthinkable US default

Article Abstract:

The US Treasury is close to a limit set by Congress in 1993 and will have to seek permission from Congress to increase borrowing above the limit. The debt ceiling will have to be raised if the government is to pay interest on government securities. A US default on debt would be a serious event since Treasuries have been seen as a safe investment. Problems may arise not so much from no agreement being reached over the budget but from the contents of such an agreement which could include a reduction in capital gains tax. This would affect the market if investors sold on a large scale to realise capital gains.

United States, Budget, Budgeting, Budgets, National debt, Public debts

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Misplaced hopes for government debt

Article Abstract:

Government borrowing is dropping in countries which are members of the Organization for Economic Cooperation and development (OECD) but this does not mean that the price of government bonds will increase. The supply of new bonds from governments may drop but investors could still seek to sell existing bonds that they hold and this has a greater impact on price. Government are not expected to reduce borrowing for long because government spending is likely to rise as the population ages. A reduction in private sector saving may also affect demand for government bonds.

Government Bonds, Government spending policy

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