...we have allowed our policy makers
to borrow and print extraordinarily large band-aids
to temporarily cover an open wound that will not heal
until we close the gap.
That gap is the difference between the face value of debt securities
and the actual cash flows available to service them.
The way to close the gap is to restructure the debt.
This will require those who made the bad loans to accept the associated losses.
By failing to do that,
we have failed to address the essential problem faced by the world,
which is that we have created more debt than we are able to service.
...the other shoe to drop is not Greece or Spain or Hungary,
but rather a second wave of major credit strains here in the U.S.
related to fresh delinquencies from exotic adjustable rate mortgages.
...it is a delusion to interpret economic statistics
suggesting an economic turnaround over the past year
without factoring out the extent to which that has been driven
by unsustainable levels of deficit spending.
John Hussman
No comments:
Post a Comment