Excellent piece on debt. Denniger acutely explains what I have been aware of for over a year now and have been harping on why the DOW ultimate bear market low is likely to be under 1000 even 500.
The cold hard facts are unavoidable.
The heart of Elliott Wave theory is that mankind advances and retreats on waves of greed and fear. These waves build upon one another over time building bigger and bigger structures, always propelling mankind's socio-economic progress forward.
But when you come to the peak of a very large and powerful waveform of Grand Supercycle Degree http://3.bp.blogspot.com/_TwUS3GyHKsQ/SnTfut6OkOI/AAAAAAAABRU/2KTDnL74yic/s1600-h/GSIII.png that has taken well over 200 years to play out, the very real decline off that peak will not be a pleasant one.
Even if we could forcibly overcome the natural super-contraction in social mood, even if we could overcome all negative economic forces facing the world today, there is no way out of the debt parabola that we have incurred.
One thing Denninger didn't mention is future promises (social security, Medicare, etc etc) will explode the parabola even higher. Political promises are also like debt. And breaking of those promises will incur even higher wrath of negative social mood.
The only way out of the of real debt and the promised debt, is to destroy the real debt and break the promises...
And that will result in a severe deflationary Depression and reinforce a historic shift of social mood to the negative.
And the market damage is likely to be great...
As EWI states, the very survival of the United States, in its current economic and political form is at stake here. There will be great political upheavals and probably the abolition of the Federal Reserve and other such things. Maybe even a state or two secedes (or is kicked out hehe). I actually think it will likely result in a great lurch toward fascism and even greater attempt at having the government control the populace for the "greater good of society" - indeed isn't that already happening?
Recessions were suppose to replenish the economic soil like a great Nile flood that, after it recedes, has replenished the surrounding ground with nutrients. Or after a great forest fire, the forest will grow anew and be stronger and healthier than before. Recessions were supposed to work the same way.
Isn't it ironic that we have outlawed flooding, forest fires and recessions all during the last three to four decades at the same time?
The end result is even greater flooding and destruction, greater forest fires, and greater economic depressions than ever before.
You can delay the laws of nature for a while, but in the end she'll catch up and force you to pay with interest....