“Every heavily indebted sovereign borrower in the world is starting to wonder if they might be next,” forecasts Eric Fry in the Daily Reckoning. “This situation is very serious, very pervasive and very unlikely to be cured by any sort of ’rescue plan.’
“The chart above places the Greek crisis in a global context. As expected, countries like Italy and Greece are high on the list. But surprisingly, the US is on par with Spain and Portugal. America's three-year funding requirement seems much more ominous when viewed in absolute dollars.
“Most central bankers of the world realize this fact. That's why they all wish to support Greece -- not because they care about Greece, but because they care about avoiding close scrutiny of their own finances.
“Runaway government borrowing creates a frightening context for any would-be buyer of government bonds. That's why long-dated bonds may be some of the riskiest assets on the planet at the moment.”
That would be a core component of our new “Trade of the Decade”: Buy Japan, Short U.S. debt.
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