We are coming to the point in the United States when even the U.S. government will no longer be able to borrow at very low long-term rates.That point is a few years off, and we have time to change paths; but as I have shown in previous letters, the longer we wait to get the deficit under control, the fewer choices we have and the more painful they are.
NO country can run deficits the size we are currently running, along with unfunded deficits over four times the size of the economy and a growing overall debt burden, without consequences.
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The Greek template being setup, with its emphasis on forced compliance through the 'CAC' collective action clause will prove to be the template in how all western governments will eventually deal with the sovereign debt issue. This template is an absolutely shrewd set of tools set to show government and government agency institutions as supreme. Individual investors are about to be shafted in such a way where the Credit Default Swap insurance is not able to be executed, but where the debt burden is relieved by government decree and legislation. They will force haircuts on all but beneath the threshhold in order for CDS to be executed. Leave it to government to find a way to f*k the people once more. STay out of government debt instruments for investments if you are wise, that is flushing good money down the toilet through a complicated set of govenement initiated laws that ensure the status quo spendthrift ways of government continue. Government bonds will soon be identified as a backdoor tax. If the government gets some of your money either with taxes or with investments that turn out to haircut or default (they dont need to default actually, not when they can force a major haircut on all to keep it within limits for credit default swap insurance), you can count on not getting most of your money back.
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