Sovereign Debt Default, not Voters, can Kill the Age of Entitlement.


imageVoters cannot kill off the Age of Entitlement. But when sovereign debt defaults happen, governments are either credit worthy or not. If not credit worthy, then the state has to pay for what it needs, and cannot borrow (via a deficit) for this purpose. So, when this happens, you magically get a balanced budget.

Want a balanced budget? Default.

Problem is, it is enforced layoffs, enforced austerity. But those who lose are the lefty losers and the would be migrants who find there is no Caitlyn Jenner styled state benefits welfare teet to suckle on.

The left are the spoilt brats screaming entitlement and bullying the kid who studies hard. They forget that the riches they seek to share so generously, even to the kids from out of town, have been accruing ever larger debts on the the family credit card. They will be the ones to scream loudly and violently act out when the credit card limit does not get extended and reality sets in.

The western model, crazily, is based on endelss deficit. Endless welfare, endless deficit, endlessly growing debt. France has made an endless student life a reality too. All state funded.

It only works if people keep lending money they know will not be repaid. The trick is, you want to lend them government money, earn your interest on it, then get it back. To do this, the government is always paying back existing debt by taking on yet more debt. So it’s like a ponzi scheme. But, something, like interest rate rises in the USA, will trigger sovereign debt defaults, which becomes contagious.

Right now we have China troubles, the Middle East, property and stock market bubbles (thanks to quantative easing), currency wars, looming Greek default (new elections in progress) and uncontrolled migrants into Europe creating potential triggers for the next storm.

Personally, I would say, in the times to come, cash is king. Wait until its doom and gloom and get back on board when it seems crazy to do so. And if you can, in the interim period, take some bets on sharp asset price falls – you may make some serious cash $$$.