A US default on Oct 18th may be useful after all .

The world overall debt has all the chances of rising further to uncontrollable levels because debts can only be paid back if activity beats price inflation and grows enough to allow for a sound balance between offer and demand and generates a surplus added value ( richness ) that serves to pay for the existing debt .

The way things are shaping it looks very obvious that consumption power is on the decline and so it may keep for years . So forget about sovereign and other debts getting better through normal return .

In this context the announcement that a mayor economy will need a reestructure of its debt , would be hard to swallow for the stability of world economy .

If however a technical suspension would occur because of events not directly involved in economic routine , the world would not panic at all and things would be limited to some typical moves by mayor world speculators that would return to normal within a short time .

The experience would be useful to measure the level of instability created on such event and use the data for more serious affairs in the years to come ..

Personally I think no matter what , that the experience will be positive as a warning to speculators and to governments who believe that all they have to do is flood the markets with money so the system is kept on a fictional balance of demand vs, offer based on a continuous growing indebtment to make up for the continuous deterioration of middle class income..



Published in: on octubre 4, 2013 at 5:52 pm  Comments (2)