L"Legendary investor" Jeff Gundlach said in a Morningstar presentation last week that the USG will inevitably default on its debt.
I wrote earlier this week that America is heading for its crush depth of debt.
What happens when a submarine reaches its crush depth? The question answers itself. World War II U-boat Capt. Hebert Werner related in his postwar book, Iron Coffins, that no one knew how deep a U-boat could dive. "Because," he said, "the only crews that found out were crushed a half-meter later." ...What Gundlach is saying is that, essentially, we have already reached our crush depth - that is, we have passed the point of no return before we reach it. We can still reverse course since the defaults he predicts don't have to be severe or widespread. But it's of no comfort that the new, Republican House Speaker, John Boehner, cannot identify even a single federal program that should be cut.
Like the sub crews, we cannot know in advance what our crush depth is. We will only find out when we've reached it and borrowed one dollar more. And then it will be too late.
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