Something is going to give. And I don’t mean in a philanthropic sort of way.
It’s not simply the US in a precarious position, either. Throughout the West, officialdom has lived beyond the means of the citizenry to pay for it. “We have” in the words of the former deputy Prime Minister of Greece, Theodoros Pangalos “been spending the future for half a century.”
While the US government has $16 trillion of debts, the Japanese have run up $14 trillion, the UK $2 trillion and the Eurozone countries $12 trillion. Unlike the US, which has retained an extraordinary capacity to innovate, neither the Japanese, nor the Europeans are likely to achieve the sort of growth required to recover.
Greece might have been the first Western country to discover that you cannot keep running up debts to pay for a lifestyle you do not earn. She will not be the last. The laws of mathematics are universal. Government – regardless of political sentiment or who wins elections – is going to get a lot smaller.
If you want know what the future of UK politics is going to look like, don’t just keep an eye the latest opinion polls. Watch out for those Japanese, UK and US ten year bond yields, too.