Is the US at a Tipping Point?


Here’s more on the US federal debt, like I posted, and what might be a tipping point.  It’s disturbing that much of European crisis originated when southern Europe joined the currency union and had much lower borrowing costs. The lower borrowing costs in turn came from the having your credit worthyness bumped up by the belief that German and Northern Europe had their back. As it noted in the piece and its links low borrowing cost can make a deficit and large debt seem much more sustainable.  But once these nations started down that path, conditions changed sharply with the economic crisis in 2008.

The US is being helped in a big way by the flight of capital from the southern European nations like Greece.  But capital can flee quickly and if it does the sustainable US deficit could quickly become much less so.  Admittedly this story has been around for some years now and hasn’t happened yet, but it seems to me that getting onto a long-term path to a more sustainable us budget is critical.

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