Defaults may soon rise in importance because in the last decade, debt has soared across the globe. Of great concern should be the growth in non-recourse loans as well as unsecured personal loans. These are particularly dangerous.

Many investors have become seduced into thinking the backing of government adds tremendous validity to both the explicit and implied warranty that come with government-backed instruments. History, however, has shown public debt can also be mishandled with creditors not getting paid or being paid with a less valuable currency eroded by inflation. More on this topic in the article below.

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