Fiscal event horizon

This is not good. And we all get to watch it happen because no one is willing to do what needs to happen. We'll just wait until China and Japan make that choice for us. [Link]

The next stage of this slow-motion train wreck will arrive when the bond rating agencies admit that the U.S. is broke and not going to get un-broke, and downgrade the risk rating on Treasuries from AAA. There’s already talk of this and warnings from the agencies; I can’t see it being more than nine months out at this point. If Obamacare actually passes, expect the downgrade sooner rather than later; vaporous talk of “bending the cost curve” isn’t fooling anyone with actual money on the table.
When Treasuries get downgraded, the Treasury will have to offer higher interest rates to sell bonds, increasing future deficits and putting solvency further out of reach. At some point not too long after that, the bond markets (and by that I mean China and Japan) will stop playing. Game over.
We have passed the fiscal event horizon. A singularity looms. Debt default, hyperinflation, or something equally traumatic is coming soon.
UPDATE: At Zero Hedge, economist Tyler Durden says: “In a word: the US collects enough money organically (via taxes) to cover less than a third of its outlays.”