Bad insurance risk?

China s Hidden Debt Risk

Germany s opposition to debt forgiveness is thus bad economics, bad politics (except at home), and bad history.

His debt is as bad as his riddle.

So at the risk of setting a bad example...

I haven't been a bad risk so far, have I?

Officially, you come under the category of extremely bad risk.

Welcome to the BAD (Big Annual Deficits) decade of public debt.

Debtor countries pay substantial risk premiums for financing their government debt.

And now the safety and security of US debt are at risk.

If something's stolen, you're labeled a bad risk and your premium goes up.

Investors were not worried about default risk on Spanish or Irish sovereign debt, or about Italy s chronically large sovereign debt.

With economic growth continuing, the potential risk posed by this debt will diminish.

Spain s huge risk premium has almost disappeared, but its debt problems have not.

My own cattle were so bad, I didn't want to risk bringing' 'em up.

Of course, some believe that the Fed s mass purchases of US debt poses an even bigger risk than Europe s sovereign debt crisis.

If heavily indebted countries have to pay heavy risk premiums, their debt becomes unsustainable.

Socializing public debt is already posing a risk to the still stable eurozone countries.

By contrast, reckless reality testing and unnecessary risk taking are often part of bad luck.

The risk stemming from local government debt is exacerbated further by massive amounts of non explicit debt acquired through arrears, credits, and guarantees.

Borrowing increases risk in any business you can t go bankrupt if you have no debt.

The risk premia on the sovereign debt of Greece, Ireland, and others have not diminished.

But failure is not always a bad thing a banker operating an all equity bank, with no need ever to repay investors, would be likelier to take unwarranted risk. The need to repay or roll over debt imposes discipline, giving the banker a stronger incentive to manage risk carefully.

And a stronger economy would help domestic banks by reducing potential bad debt and mortgage defaults.

A similar battle is now brewing about America s debt ceiling, which, if unresolved, introduces the risk of a technical default on US public debt.

Now China is experiencing a fourth instance of elevated debt risk, this time characterized by high levels of accumulated local government and corporate debt.

So if the firm takes on too much debt, the cost of debt rises as creditors demand a higher risk premium, and ROE decreases.

Indeed, increased debt servicing obligations resulting from higher interest rates, along with weakening export prospects, ran the risk of reproducing an unsustainable debt burden.

It didn t work. Eurozone sovereign debt turned out not to be homogenous with respect to risk.

Greece simply cannot afford to repay its debt at interest rates that reflect the inherent risk.

The real risk concerns the potential for bad political choices to make climate policies worse than necessary.

In paragraph 120, the Board recommended that UNRWA revise its accounting policy for the treatment of provision for bad debt of loans, taking into account the type, geographical distribution and all risk factors affecting the recoverability of loans.

But the risk that the world s investors currently are trying to avoid by rushing into US, Japanese, and German sovereign debt is not a fundamental risk.

And, as Reinhart and Rogoff say, a correlation between high debt and low growth is a sign that one should investigate whether debt is a risk.

The risk of default or debt restructuring induces creditors to be more careful in their lending decisions.

Similarly, too big to fail banks would not care about the failure risk associated with debt financing.

But Europeans, while having launched national recovery plans, remain unwilling to take on a similar debt risk.

Sovereign risk lending to Governments that have been trapped in debt crises can be difficult to arrange.

How large was the total debt at risk? Was it more than the developing countries could service?

In some countries with high levels of debt and impaired growth, fiscal stimulus could raise the risk premium on sovereign debt and be counterproductive others have more flexibility.

Something started to cause investors to fear that Greek debt had a slightly higher risk of eventual default.

The major risk to the sustained role of the dollar is the large and growing US national debt.

debt service coverage reduces the financial risk to investors and translates into lower borrowing costs for the borrower.

However, the problem arises when the debt becomes unsustainable and the country faces a risk of sovereign default.

Large financial intermediaries endanger the entire financial system when they use the wrong risk model and make bad decisions.