“Governments worldwide have borrowed 100 trillion last 10 years. Defaults inevitable sometime soon. Means crash, hurting rich and poor,” News Corporation CEO and Chairman Rupert Murdoch recently tweeted.
“Of course markets stay high with central banks printing huge sums, inflating everything except jobs,” he had pointed out in a prior tweet.
And Rupert Murdoch isn’t the only “elite” “insider” hinting at something unpleasant down the road if governments continue their spending (which they are doing, unabashedly).
Hedge funder David Einhorn recently opined over at Huffington Post: “I believe that stocks are depressed because there is a pervasive feeling that something awful is going to happen. What is this enormous tail-risk? It’s the intersection of reckless fiscal policy with Jelly doughnut monetary policy. There is a fear that our Fed Chairman is an academic willing to take great systemic risks in an experiment to prove out his thesis as to how we should have fought the last Great Depression.”
And yes, the federal government really has been spending a LOT lately.
CBS News last year reported that the Obama administration has effected “the most rapid increase in the debt under any U.S. president,” bringing us more than $4 trillion in fresh public debt since he took office. Is there some top-secret war being waged against an alien species on Mars?
No, the truth is far more mundane: hapless military excursions in the Middle East, never-ending entitlements, declining revenues (due to declining economic growth), and outlandish police state expenses like a $2 billion data centre in the Utah desert to spy on American citizens’ online communications — sadly this list explains much of our debt.
Automated data centres aren’t exactly the best way to boost [human] employment, by the way.
Other debt icebergs, perhaps far more pernicious, lurk just below the surface: student loan debts have reportedly surpassed the $1 trillion mark, and with more than 1 in 2 new graduates unable to find gainful employment, this is a huge class of borrowers that appear less capable than ever of repaying their debts.
2012 should be interesting after the summer malaise subsides, giving way to real fear.
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