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Jun 25
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Yahoo finance have an interesting interview with Michael Pento, senior market strategist at Delta Global Advisors. The man has come up with some neat mathematical calculations on why Americas’ debt is a disaster waiting to happen.
I have always thought uncle Sam is too big to fail but after reading Michael Pento interview the US could be another Greece tragedy or may be, another Argentina.
Using Treasury Department’s recent U.S debt estimates that showed total U.S. debt will top $13.6 trillion this year and rise to 102% of GDP by 2015. Moreover, the publicly traded debt (debt excluding intra-governmental obligations) will rise to $14 trillion by 2015, up from “just” $7.5 trillion in 2009.
Mr Pento then calculates, At $14 trillion, the interest payments on the public debt will total about $1 trillion in 2015, he continues; even assuming solid growth and low inflation, that would equal about 30% of total government revenue. “What do you think that does to our bond market?,” Pento wonders. “It leads to a dollar crisis and a bond market crisis. That’s why gold refuses to go down. ”
If Pento is right then expect the yield on US treasuries to rise. Investors in bonds could see the value of the bonds fall.
Read the rest at the Source Yahoo Finance