Opinion (John Mauldin, President of Millennium Wave Securities): “The reality is they’ve got a massive trade imbalance in Europe. The Southern countries want the Germans to finance it. The Germans want a fiscal Union with control over the budgets. I don’t know how it’s going to turn out, they don’t either, but it is coming to an end.
“What we’re seeing is the real end game. We’re coming to the end of government’s ability to borrow money to fund current spending that’s beyond the growth of their economy.
“I actually find that massively bullish because that government funding misallocates capital. So governments are going to have to live within their means. Not just in European countries, not just in Britain, not just in Japan which has its own problems that will be coming to us next year, not just in France which will be the headline in 2 years, but also in the US. …
“Debt has been renegotiated, it’s been printed, defaulted upon, restructured. There are all sorts of ‘re’ words we talk about, but it’s default by another name. It’s what happens if you as an individual have more debt and you have more than you can possibly pay, you have to restructure something or file bankruptcy.
“That’s where Western governments are. They’ve run out of the ability to borrow money to finance their current consumption. This is a good thing that it’s coming to an end. I don’t see this as negative in the longer-term. It’s still going to be a bumpy ride for the markets. It’s certainly going to be (an interesting) ride for the business as usual crowd.”
My Comment: The solution seems simple, proven, but it is not so; we are dealing with the restructuring of society; nature will try us until we recognize the bankruptcy of our egoistic attitude towards the world and the need to change it. We will have to pay not by cutting budgets, but by changing ourselves.