Courtesy of The Pragmatic Capitalist
We’ve spent a great deal of time here at TPC focusing on the real economy and the impact of the public and private debt on Main Street. While many investors prefer to get caught up in the short-term gyrations of the market it is important not to lose sight of the bigger picture and the deleveraging that has yet to take place. The problem of debt still exists and threatens to hamper the economy for years to come.
Attached is an excellent piece of research from John Silvia and Kim Whelan at Wells Fargo which we are reproducing with their permission. They detail our concerns succinctly and eloquently. This is a must read for any investor who is trying to wrap their head around the current long-term implications of our massive outstanding private and public debts. Reader comments are encouraged.
While the budget gap will narrow in the near-term, the long-term trend does not show a return to fiscal discipline, rather the destruction of it.”