Harare. We Have a Problem

We’ve argued that the U.S. is in deep long-term economic trouble because of the sharp uptrend in government spending and debt, but is not at a tipping point at which bond market vigilantes and currency vigilantes would suddenly sell U.S. assets. Our view is that U.S. household assets (i.e. private sector ownership) is still large enough compared to total U.S. debt that the problem is one of dissipation and U.S. underperformance rather than imminent crisis like Europe’s periphery.

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