We were told that if we defaulted the markets would plunge. We lifted the debt ceiling and the markets are plunging. Did we get it wrong? I think so.
For the past two years, I have been writing reports with the same title on several occasions. Simply put, if they didn’t stop the deficit spending, there would eventually be a tipping point…and it will be the markets that stop them. It is my take that the markets have finally had enough. Politicians around the globe kept taunting the markets with their out-of-control spending; we may now be seeing the outcome. This is not just about the U.S. but around the globe. It is my take that the recent debt ceiling shenanigans finally showed the markets that nothing was going to get done. Let’s spend $10 trillion more over the next 10 years and then cut $2.4 trillion and call that cutting spending? I don’t think so. But it doesn’t matter what I think. It matters what markets think. Markets are fighting back across the globe. Debt hurts. Gargantuan debt that can never be paid back killls! It amazes me to watch some say we haven’t spent enough. They need to be muzzled! Again, please recall that Lehman, Merrill, Wamu, Countrywide and Bear did not go out of business.
The markets put them out of business.
Maybe we have gone past the tipping point and have tipped into a recession/depression that will rid us of the huge amount of debt that we have accumulated. Both parties have contributed to this and maybe the day of reckoning is upon us.
We need people in Washington DC and in other capitals of the world that understand that creating more money with nothing to back it is worthless. And that redistribution of wealth destroys wealth it doesn’t redistribute it. As Margaret Thatcher said “the problem with Socialism is that sooner or later you run out of the other guy’s money” (paraphrased).
There is a reason that Socialism has failed in every country that it has been tried and it is currently failing in Europe and the United States of America.