Govt Borrowing, it's a biggie

They Need to Borrow How Much? Really?

The team over at Recovery Partners sent this note along:

"This week we heard from the IMF that the total borrowing requirements of key governments in 2011 will amount to around $10.2 trillion. The estimate represents a rise of 7% from 2010 and over 27% of the annual GDP of the developed economies.This rollover profile exposes the vulnerabilities in thematurity composition of Sovereign liability portfolios and thelikelihood that most Sovereigns will find it impossible to appropriately de-risk their financial exposures by extending term or otherwiseexecuting an immunization strategy. The bottom line is that unless deficit control and the establishment of debt management performance benchmarks is adopted as a matter of urgency in many economies, it becomes very easy to envision the near term onset of another round of severe financial turbulence."

That is obviously a lot of money. It is also government borrowing that is crowding out private investment. And as we look over the "pond," the euro is again under pressure. Just when you thought QE2 was going to tank the dollar.