Journaltalk - Introduction to Symposium on U.S. Sovereign Debt Crisis: Tipping-Point Scenarios and Crash Dynamics

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1. In his introduction, Professor Cowen says that the U.S. has
   10-20 years before a “tipping point.”

   I don’t see anything like that time frame. I am not arguing. It is a
   serious question and it would be great if he iscorrect.

   I would appreciate any explanation as to how things will hold together that long?

   I understand that the question is kind of asking to prove a negative so
   here is my perspective. I would love to be wrong about it as well.

   Mankind’s first attempt at guaranteeing retirement, health care, financial
   security, housing, employment, and sustained economic growth has gone badly
   awry. The attempts at sustained economic growth have already created and
   are maintaining our current economic difficulties.

   The creation of the Euro allowed a number of European countries to sustain
   very destructive economic policies. While most of the media attention is
   focused on debt issues, the underlying structural problems are really what
   will bring the continent down. Europe’s recession/depression will likely
   trigger China and Japan’s underlying structural problems and a
   recession/depression in those countries.

   Obviously, if all that takes place, the U.S. and the rest of the world will
   follow. My assumption has been that the Fed, ECB, BOJ, and Chinese
   authorities would “quantitatively ease” things to get past the U.S.
   elections. I am no longer sure that it will last even that long.

   My number would be 6 – 18 months, not 10-15 years.

   I would strongly prefer to be wrong, so any help in
   straightening out my thinking would be greatly appreciated.

   John Bailey

   posted 11 Feb 2012 by John Bailey