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Bond Outlook June 23 2010

“Everyone” is into retrenchment, Europeans by political will, Americans under market forces. It remains to be seen whether sustainable growth lies the other side of the pain.

Bond Outlook [by bridport & cie, June 23rd 2010]

Retrenchment is now all the rage. There is scarcely a European country which is not looking to instigate some form of austerity programme, even when one seems unnecessary or inappropriate, as may be the case in Germany. The coalition Government in the UK has now delivered its “budget from hell”, as it has been christened, with the usual hyperbole, by some of the press. In the UK, as elsewhere, it is the public sector which is the most under attack. What a tragedy that it has taken this crisis to create the political will to correct the imbalances between the privileges of the public sector (notably early and well paid retirement) and the realities of the private sector.


There will, of course, be much vocal opposition in many countries, but for perhaps the first time in many decades, governments who have so habitually capitulated to public-sector strikers should find the courage to see through the necessary reforms. It does seem to have finally sunk in that there is no alternative.


There might have been an alternative many years ago when out of control spending programmes were being hidden by asset-inflation.

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