SOVEREIGN DEBT
Here’s some sobering numbers from the US:
- Interest payments on the debt increased by $177 billion or 33%.
- Medicare spending increased by $126 billion or 18%.
- Medicaid spending increased by $24 billion or 4%.
- Pension Benefit Guaranty Corporation spending increased by $38 billion.
- FDIC spending amounted to $92 billion as the agency dealt with bank failures—an increase of $101 billion.
What This Means:
Let’s be clear about the danger America is facing. The US has an unprecedented, almost incomprehensible, $33.5 trillion national debt that has eclipsed the size of the economy.
Every person in America today owes more than $100,000. They are forced to borrow over $75,000 every second just to cover expenses. The budget deficit of $1.7 trillion shows how this burden grows yearly.
Families will be decimated by record-high inflation and access to capital.
Today, the average family of four is paying $14,700 yearly or $1,224 more per month to purchase the same goods and services compared to the day sleepy Joe took office.
But it’s not just the US.
Global sovereign debt is the world’s most glamorous pyramid scheme.
Move over, Amway; there’s a new player in town, and it’s got countries across the globe wrapped around its debt-laden finger.
We live in a world where countries engage in a high-stakes game of financial Jenga, each one desperately trying to avoid being the next to topple over. It’s a spectacular sight, really, like a global circus where the acrobats juggle debt instead of flaming torches.
Now, let’s talk about the architects of this financial circus – the political class themselves. These financial virtuosos have mastered the art of spending money they don’t have, all while smiling for the cameras and assuring their citizens that everything is under control. It’s the ultimate magic trick: turning debt into the illusion of prosperity.
Now, let’s talk about the debt enthusiasts — the bondholders. These financial daredevils willingly lend money to countries, fully aware that repayment is a distant dream. It’s a game of financial chicken, with both parties hurtling towards a collision course, but who cares when it’s someone else’s money right? Pension funds I’m looking at you.
Credit Agencies
Let’s not forget the credit rating agencies, those purveyors of financial wisdom who assign grades like teachers handing out gold stars. Somehow, they manage to maintain a straight face while giving top marks to countries drowning in debt. It’s as if they believe that, with enough positive reinforcement, the debt will magically disappear.
In the grand scheme of things, global sovereign debt is the ultimate soap opera, with each country playing its role in the never-ending drama of fiscal irresponsibility.
It’s a thrilling spectacle of financial acrobatics, where countries balance on the precipice of economic disaster, hoping that the safety net of international goodwill will catch them if they fall.
So, there you have it — the state of global sovereign debt, a glittering, high-wire act that defies the laws of financial gravity. As the world continues to teeter on the edge of fiscal insanity, one can’t help but marvel at the audacity of it all.
Our belief as you know is that the bond markets have reached their zenith and now will continue on a long term downward trend. Our job is to ensure that we’re nowhere near the carnage to come.
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