States and Sovereigns: Eurozone and U.S. State Debt Woes (Pershing, a subsidiary of MFA Strategic Partner BNY Mellon)

April 13, 2011

KEYWORDS: asset managers, debt, Eurozone, Ireland, Portugal, Greece, Spain, Italy, government debt, currencies, devaluation, European Union, EU, United States, U.S., Roubini Global Economics, pensions, European, default

Authors:

Senior Strategists at Roubini Global Economics

Organizations:
  • Pershing, a subsidiary of MFA Strategic Partner BNY Mellon

Summary:

Today, asset managers are gauging the potential consequences of ballooning debt in two diverse markets: U.S. states and the peripheral members of the Eurozone that include Portugal, Ireland, Greece, Spain and, to a lesser extent, Italy. In both cases, governments struggle with debt issued in currencies they do not control. This eliminates devaluation as a solution and raises the specter of potential restructuring.

Do U.S. states and Eurozone nations present similar risks? Are their debt and deficit levels sustainable—and for how long? How do recent political events shade the forecasts for each market?

Related Research and Data