jbs

Three Views on Whether Financial Disaster Lies Ahead for the U.S.

There's one theme throughout this article: we must be in for a doozy because we're seeing things we haven't seen before. Be it above-average levels of debt or below average defaults or whatever else people are coming up with.

But just because this is different does not makes this situation a "bubble." These people are looking at numbers and failing to provide insightful analysis into WHY this is unsustainable. Much of the reasoning just goes "x is different than the historical average, so it's unsustainable." I'm not saying they are wrong, but their reasoning doesn't lead to their conclusion, unless you assume that reversion to the mean always holds - but it doesn't. You must look at the reasons underlying the changes before you can conclude that the changes are unsustainable.