The End Game of the Debt Super Cycle

Of Debt, Growth and Stocks from Forbes:

There has been a huge shift in the way people perceive government deficits. We can thank Greece for that. The Greek debt crisis of late spring 2010 changed the entire conversation. Everyone – on television, talk radio, op-eds, blogs, tweets – now talks about debt.

And not just Greek debt. The crushing debts of Ireland, Spain, Portugal and Italy make front-page news. Thanks to the Internet, which did not exist in its present broadband Web form in the early 1990s, voters have access to facts they didn’t have before. Hard facts lead to hard questions. For example: Why should a working 62-year-old frugal German bail out a government pensioned 51-year retired hairdresser in Greece?

….The more questions are asked, the more focused and granular they became. New York, Illinois, California – which state will default first? What about my city? How safe are my tax-free munis? Why are we taxpayers giving retired policemen 100% salary pensions, often goosed up with triple overtime pay in their final year? Why are we paying lavish pensions while city streets are crumbling and the city park bathrooms stink to high heaven?

….This now ubiquitous talk about debt and its consequences is surely a game changer. It has changed America’s elections and politics, perhaps for a generation. When a heavily indebted state like California or Illinois defaults in 2012 or 2013, the American people will not be tricked into a bailout with sob stories of laid-off teachers. Texans will have a good laugh at California’s expense, but Texans will not accept a penny of new taxes to pay for this entertainment. The conversation, you see, has changed. Now Texans have the facts at their grasp. Facts, oh, such as California state prison guards making three times the salaries of Texas state prison guards.

It’s the end of the Blue state bailouts.

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