Rogoff sees "likely" a wave of bankruptcies sovereign and bailouts from the IMF

More fuel to the fire. After warnings from Nobel economist Paul Krugman and Nouriel Roubini, now is Kenneth Rogoff, former IMF chief economist, who avanaza a "probable" wave of bankruptcies and bailouts sovereigns. Greece is not going to be "easy".

Rogoff, former chief economist of the International Monetary Fund (IMF) and author, with Carmen Reinhart of the book This Time is Different: Eight Centuries of Financial Folly , has released several pearls about the financial plight living several developed countries.

For Greece notes that "avoid default on payments may be possible but not easy. One has only to look to official data, including Greece's external debt, amounting to 170% of national income, or huge government budget deficit (almost 13% of GDP).

In a recent article published by Project Syndicate , and collected by the blog RSS News , Rogoff warns that "unfortunately, for emerging markets, the set [tax] is often impossible without outside help. That is the abyss in which Greece is today."

Moreover, as demonstrated in his work, after a financial crisis of great magnitude is usually a wave of sovereign default. And it seems that on this occasion, the situation will be different. Thus, according to the economist, "some countries almost inevitably going to experience redemptions and defaults.

"This correlation in fact is not surprising given the massive buildup of public debt that countries typically experience after a banking crisis. Without doubt, this is what we are seeing at this time, in which the debt of countries in crisis and has increased over 75% since 2007, "he adds.

Hence, it is "likely to see a wave of defaults and IMF programs on this occasion", although it is true that "the fiscal crisis did not have to hit all highly indebted countries. In this sense, "Greece can avoid a collapse like Argentina, but needs to dedicate to make adjustments much bolder."

Problem? Not be easy. Rogoff added that "most of the Greeks are doing everything they can to avoid thirst likely higher government revenues, thus, wealthy Greeks are transferring money abroad and ordinary people are migrating into the underground economy . The underground economy in Greece, whose size is estimated at up to 30% of GDP, is already one of the largest in Europe and is growing day by day. "

The IMF insists that can rescue Greece

The director of the International Monetary Fund (IMF), Dominique Strauss-Kahn said Thursday they will intervene in favor of Greece if requested, but hoped that the Europeans are dealing with the situation in this country that is serious .

"If they ask us to intervene, we will, but I understand that the Europeans to resolve the problem between them," he said in an interview with RTL radio, Strauss-Kahn. At the same time, said he has "more confident" that the situation will be resolved, noting that "Europeans have become aware of the problem" and the Greek Government has launched "serious policy," Efe reported.

Kahn also described as "very strong" economic crisis in Spain, so it warned that the Spanish should make an effort to "substantial" and was sympathetic about the proposed reform of the pension system raised by the Government, including delaying the official retirement age to 67 years.

Finally, the director of the IMF warned that the crisis is not over, in view of a recovery "extremely fragile", particularly in European countries or the United States.

For this reason, the leader of the IMF reiterated the need for public incentives in the economy, something clearly contradictory, other analysts said, because most of the new growth observed is supported by public sector demand, while private demand is still very low.

The French socialist politician, when asked whether she plans to stand for next presidential election in France in 2012, said he intends to fulfill its mandate, which ends after that vote, but is willing to reconsider.

Long Crisis?

Niels Jensen, partner in the firm Absolute Return Partners says in his latest letter to investors that the crisis can be extended in time. The economy is still immersed in the credit necessary deleveraging process. Jensen agrees with famed U.S. investor John Mauldin that recent years of "excessive debt accumulation can not be reversed in just 18 months, at least, it will take between 5 and 6 years to complete, possibly longer," referring the U.S. economy.

Moreover, the key issue is that while private debt of households and firms has started to decline, this is practical force has been offset by the substantial increase in public debt under the guise of combating the crisis, this process is also happening in Spain.

According to Jensen, the only thing that has been achieved so far is to pass the toxic liabilities balances private public, which will result in "a burden on future taxpayers. A growing debt, as noted, has caused deterioration of the fiscal sustainability of many advanced countries.

But in addition, the problem is not just some isolated. Since last January the Monetary Union countries have seen a record need public financing (issuing bonds) of 175.000 billion. In the last week, the governments of the region have borrowed another 38,000 billion dollars, according to Barclays Capital.

Theodora Zemek, head of fixed income at AXA Investment Managers, said that "the problem of country risk is just beginning. The countries with high debt levels will have to pay higher yields to issue new bonds," reports Financial Times.

Is Spain the next?

In this regard, Jensen concludes with a warning. "I'm not sure there is a strong consensus in favor of a rescue package" for Greece, he adds. The possibility of rescuing this country has been defended, precisely because the Spanish Government-impact analyst, contrary to defending the great European powers like Germany and France.

"Perhaps not surprisingly, is the Spanish government seems more willing to approve the conditional rescue of Greece, considering that very well could be the next victim of the invisible hand of the bond market," it warned.
In recent days, the socialist government has shown a "major commitment" of fiscal consolidation by submitting a plan for stability. Furthermore, it has been willing to delay the retirement age to 67 years, recalls Jensen. But "the problem for Spain is to move from words to deeds". He adds: "Few analysts believe realistic" goal of reducing its public deficit to 3% of GDP in 2013, "given the depth of the problems of Spain at this time," he concludes.