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Niall Ferguson: Others will follow Greek debt tragedy

Niall Ferguson: Others will follow Greek debt tragedy

Courtesy of Prieur du Plessis’s Investment Postcards from Cape Town

The world debt overhang is threatening the world recovery, because markets will realize at some point how risky it is and the yields on bonds will increase, Niall Ferguson, professor of history at Harvard University, told CNBC on Thursday.

“I think we have a situation where Greece is leading the pack but other countries will follow,” Ferguson told “Squawk Box Europe.”

Very few countries were able to cope with debt of over 100% of GDP in the past, and “the classic question is whether or not you default or try to inflate it away,” Ferguson said.

The United States is in control of its currency and can print more to reduce its debt, but Greece and other countries in the euro cannot do this, therefore the cost of their debt will rise, he predicted.

Source: CNBC, January 28, 2010.

 

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