PIIGS (Portugal, Ireland, Italy, Greece & Spain)

"Based on historical precedents its very likely the US and Japan will default." - Marc Faber

It's difficult to imagine that it has taken folks so long to wake up to the idea that the level of debt and unfunded liabilities in nearly all Western nations has become overwhelming to the point that it is constricting economic growth. Capital which was once re-invested in business and infrastructure is being siphoned off to creditors. It has been reported by some that the amount of federal spending since 1776-2008 in the United States is approximately equal to what has been spent and committed in 2009. This will not be without consequence.

Dollar Crisis Looms If US Doesn't Curb Debt

The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

"It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally," said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.

President Barack Obama's administration will present his budget for fiscal 2011 early next month amid intense pressure to live up to election campaign promises not to raise taxes on middle class Americans, while confronting a record deficit.

As a result, Obama is expected to focus on long-term fiscal discipline, while maintaining policy support for an economic recovery in the near-term as the country rebuilds after its worst recession since the Great Depression.

The two-year study by the panel, assembled by the highly respected National Research Council and the National Academy of Public Administration, said that the White House had some time on its side to restore growth, but must then act.

"In the next year or two, large deficits and more borrowing are unavoidable given the severity of the economic downturn. However, action ought to begin soon thereafter," they said.