JP Morgan warn on 'boiling frog' US$34 trillion debt – could easily become unsustainable

<p>Media reports on the US' $34 trillion debt pile:</p><p>JP Morgan say it could well be a "boiling frog" phenomenon for the economy, as higher deficits and ballooning debt servicing costs could easily become unsustainable</p><p>What's this about a boiling frog? It's a metaphor (its also utterly wrong, a myth, but more on that below):</p><ul><li>a boiling frog situation is one in which people fail to act on a potential problem that grows over time, causing it to become more severe until it eventually bubbles over. A frog thrown in boiling water might jump out, but if the water comes to a boil slowly, it's too late by the time it notices it's being cooked.
</li></ul><p>Anyway, JPM argue that:</p><ul><li>national debt hit a fresh $34 trillion this month</li><li>debt picture will only worsen in the coming years</li></ul><p>JPM:</p><ul><li> "The problem for the US is the starting point; every round of fiscal stimulus brings the US one step closer to debt unsustainability," </li><li>"However, we're accustomed to deteriorating US government finances with limited consequences for investors, and one day that may change (the boiling frog analogy)" </li></ul><p>—</p><p>Unlike US Congresspeople, frogs are not stupid. If you tried to boil a frog, it'd notice as the temperature increased and hop out once it got too hot for comfort. </p>

This article was written by Eamonn Sheridan at www.forexlive.com.