1. the_sleuth's Avatar
    I am definitely worried as to what is going on around many OECD nations, particularly in Europe, Japan and USA. Very high sovereign debt levels are forcing governments to cut spending and thus crowd out economic growth.

    This did not start with the credit crisis. Entitlement programs (or the welfare state) has been an experiment for over 70 years. When Bismarck instituted the first pension plan in Germany in the 1800s, the average life expectancy of a male was 46 years. In the 1930s, when FDR announced the New Deal and Social Security, the average life expectancy of a male was 63 years.
    With low interest rates and equity market volatility, these type of entitlement programs represent the largest portion of debt and future liabilities in OECD nations. The system to fund these programs is broken.

    Even in Canada, Canada Pension Plan is underfunded to the tune of $776 Billion. Canada's national debt is rapidly growing to over $550 billion (not including CPP and other national programs). If Canada is not careful, it can suffer the same fate as Europe and USA.

    In 1976, Margaret Thatcher once said, "Socialism works great until you run out of other people's money." The Iron Lady is prescient.

    An Opinion of Cato Institute on USA:
    The next Greece | FP Comment | Financial Post
    08-06-11 10:23 AM