Why Borrow in the First Place?
In his July 2010 Investment Outlook, PIMCO's Bill Gross addresses what motivates people, companies and countries to borrow. Referring to insights from a recent article by Philip Coggan in the Economist, Gross points out that borrowing boots standards of living by bringing consumption forward instead of "languishing in the present."
Gross addresses the implications of when liabilities become so large that the growing interest burden and the lower probability of repayment overwhelm both the borrower and the lender. Click here for his outlook.