Stockman: Warns on U.S. “Bond Armageddon”; First Default Could Be to IMF

Courtesy of Robert Wenzel at Economic Policy Journal

David Stockman, former Budget Director under Ronald Reagan, told CNBC’s Nicole Lapin that the first default by the United States government could be a payment to the International Monetary Fund. Lapin reports:

He said that this careless “shoveling” of money could lead to a default here in the U.S.— and suggested that the first default will be on our payments to the IMF.

Overall, Stockman doesn’t think much of the IMF or what the rescue attempts of the PIIGs are doing in Europe. Lapin again:

We’re doomed on both sides of the pond, he told me on the set of “Worldwide Exchange,” and he didn’t hold back in name-calling the “lunatics” responsible for our global fiscal mess—especially the EU and the IMF.

In Europe, Stockman raged against a dichotomy of tax and debt slavery created by the EU: “They’re attempting to go turn the prudent Europeans of the north into permanent tax slaves in order to bail out the big banks in France and Germany and elsewhere who don’t deserve a bailout,” he said, adding that, “In order to accomplish that, they will attempt to turn the millions of people who live in southern Europe into permanent debt slaves in order to pay the piper from the guarantees coming from the north.”…“The IMF is an absurd institution,” he said. “It’s destructive. It’s the source of holding this whole thing together with bailing wire.”

“And the sooner their number is called, he said, “The better off I think we’ll all be.”

What does he think of the U.S. situation? He told Lapin:

First off, as an investor, he’s short bonds and warned me of “bond Armageddon,” where rates could potentially go up to five percent.

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