Roubini Says Rising Sovereign Debt Leads to Defaults

Milken compared the excess debt of U.S. consumers, companies and government to the nation’s obesity problem, saying the “best solution” is to become more efficient instead of raising taxes or unnecessarily cutting expenditures.

“If we could just get Americans to reduce their weight to the same as they weighed in 1991, we could save $1 trillion and the U.S. could create $1 trillion of value,” the junk-bond billionaire-turned-philanthropist said on the panel, moderated by Matt Winkler, editor-in-chief of Bloomberg News.

SHOOT: I like this analogy between debt and obesity. The keyword is self-discipline in terms of one's appetitie, whether greed for things or greed for food.

clipped from www.bloomberg.com April 29 (Bloomberg) -- Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a  year before it began, said sovereign debt from the U.S. to Japan  and Greece will lead to higher inflation or government defaults. Almost $1 trillion of worldwide equity value was erased  April 27 on concern that debt will spur defaults, derailing the global economy, data compiled by Bloomberg show. German Chancellor Angela Merkel and the International Monetary Fund  pledged to step up efforts to overcome the Greek fiscal crisis, after bonds and stocks fell across Europe in the past week. “The bond vigilantes are walking out on Greece, Spain, Portugal, the U.K. and Iceland,” Roubini, 52, said yesterday during a panel discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California.  “Unfortunately in the U.S., the bond-market vigilantes are not walking out.” While a smaller euro zone “makes sense,” he said, “it could be very messy.”