Of Addicts, Fixes, and Enablers

You like to think that you're immune to the stuff, oh yeah
It's closer to the truth to say you can't get enough
--Robert Palmer

The end game for a country addicted to spending and debt is when creditors close the borrowing window. At that point, two things can happen--actually 3 things.

One is that the addicted country quits borrowing and spending cold turkey. Two is that the country, if it holds a printing press for its currency (the US does; Greece doesn't), simply prints paper to pay their creditors and distribute to their people under the pretense that the paper represents claims to real economic resources.

Third is that the country, if it holds a powerful enough army, holds other countries at gunpoint for a fix (until it runs out of ammo, of course, which could be sooner than people think).

The consequences that follow any of these alternatives are not pleasant.

So the US keeps borrowing and spending because, well, because there are still lenders out their willing to finance our habit. In the addiction context, creditors can be seen as 'enablers.'

Interestingly enough, recent reports suggest China may be backing away from Treasuries in size.

Could be something; could be nothing. We've had some 'false alarms' from our Asian creditors before and this may be another one.

But the day our enablers pull out for good, then the addict is forced into painful action.

Addicts, of course, refuse to think that far ahead...

position in USD