European Nations ‘as Bad as Argentina,’ Ferguson Says

From Bloomberg.com

Many European governments’ finances are as risky as Argentina’s were at the height of its worst financial crisis, and the U.K. gives cause to be “extremely nervous,” Harvard University professor Niall Ferguson said.

“It is a myth that countries don’t go bust, you only have to look at the history of Latin America to see that they do,” Ferguson told Bloomberg Television today. “When you look at the financial position of many European countries today, especially east European countries but also some west European countries, it’s every bit as bad as Argentina was in 2002.”

The average euro region budget deficit will swell to 6.5 percent of output this year, more than double the European Union’s limit, the European Commission forecasts. In the U.K., Prime Minister Gordon Brown’s government predicts an annual shortfall almost twice that size because of the cost of bank bailouts and a slump in tax receipts from the recession.

“One has to be extremely nervous about the situation in the United Kingdom, borrowing on the same scale as the U.S. but without a reserve currency,” Ferguson said.