Kroll Bond Rating Agency Publishes Research: Achieving Stability & Growth in Europe

Kroll Bond Rating Agency (KBRA) has published a macro-market research report “Achieving Stability & Growth in Europe.” The report makes the following key points:

• Since the 2008 financial crisis, the fastest growing economic indicator in many industrial nations has been public sector debt. Faced with the reality of public and private debts that cannot be repaid, a number of nations have embraced negative rates, an explicit transfer from savers to debtors. In setting zero or even negative interest rates, the Federal Reserve, the European Central Bank (ECB), and Bank of Japan (BOJ) have essentially created a fourth phase of the historical progression of public indebtedness which is widely known as “financial repression.”
• Credit conditions in the U.S. are relatively strong, banks in KBRA’s rated universe are more than adequately capitalized and the financial system has largely dealt with all significant asset quality problems. Yet both in the U.S. and the EU, KBRA notes, the public at large remains profoundly unhappy with the economic situation and continues to focus critical attention on the banking sector.
• KBRA notes that today’s economic policy debate seems comprised of a binary choice. On the one hand, we are offered radical action by global central banks including the forced transfer of value from savers to debtors, and on the other, increased fiscal spending funded via either more debt or higher taxes. KBRA believes that there is a third choice, namely to make public policy pro-growth as well as pro-consumer, with a balanced approach that is constructive rather than punitive.

To view the full report, please click here.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

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