DislikedWell, I believe the flat area will continue because of the debt load. Without deleveraging there will be no real growth. Govt. cant deleverage because of no growth. Some where somehow there has to be a deleveraging and someone has to take a hit. At this point if I have money out there, (like my SS fund, over 40% of US govt. debt is financed by the SS fund) and I want to protect it, I would be more than happy to take principal payments so it is still there for another day. I would think the bond market would feel the same. I get my money back versus...Ignored
When it comes to solving the West's problems I see debt as a symptom, not the actual problem. The real problem the West is facing is that their labor markets are increasingly uncompetitive.
Think about Greece. Even if Greek workers were paid the same as Chinese workers, would it make sense for a factory in China to move to Greece? Probably not, because the fixed cost of moving would make it unprofitable. And the Greeks are paid 7-8 times what the Chinese are. So what, exactly, are the Greeks going to do to compete with the Chinese? And red necks in Alabama are facing the exact same problem.