Greece isn’t the only country drowning in debt. The Debt Supercycle—when the easily managed, decades-long growth of debt results in a massive sovereign debt and credit crisis—is affecting developed countries around the world, including the United States. For these countries, there are only two options, and neither is good—restructure the debt or reduce it through austerity measures. Endgame details the Debt Supercycle and the sovereign debt crisis, and shows that, while there are no good choices, the worst choice would be to ignore the deleveraging resulting from the credit crisis. The book: Reveals why the world economy is in for an extended period of sluggish growth, high unemployment, and volatile markets punctuated by persistent recessions Reviews global markets, trends in population, government policies, and currencies
Around the world, countries are faced with difficult choices. Endgame provides a framework for making those choices.
Q&A with Authors John Mauldin and Jonathan Tepper
Author John Mauldin What is the debt supercycle? Over a period of about sixty years, debt levels grew faster than incomes. This increase in debt became particularly pronounced in the 1980s, 90s and finally went parabolic after the Federal Reserve lowered interest rates to 1% after the Nasdaq crash. The increase in debt was not just a US phenomenon. As interest rates fell structurally with the fall in inflation from 1982 onwards, people took on more debt because it became more manageable. However, by 2008 the burden of debt became too much to bear and the debt supercycle came to an end. People started deleveraging and banks started collapsing due to low levels of capital and large losses from loans people couldn’t pay back. How does the sovereign debt crisis play into this? The rapid contraction in debt levels due to default and deleveraging lead to a fall in economic activity as people started saving and cutting spending. Governments immediately stepped in and backed bank debt with explicit guarantees. Governments also started borrowing and spending to transfer money to the private sector, for example via unemployment insurance. So in a very real sense, private borrowing was replaced with public borrowing. Debt was added onto more debt. Rather than free itself of debt, the system now has more debt. The sovereign debt crisis is the recognition that most of this debt will not be paid back, and governments are making promises to pay debt and other obligations, for example general spending and pensions, that they simply lack the ability to fulfill. 
Author Jonathan Tepper The end of the debt supercycle and the beginning of the sovereign debt crisis present problems and challenges for investors and governments. Governments will need to either 1) inflate, 2) default or 3) devalue, which is similar to inflate. That is the way governments have historically dealt with too much debt. Some countries will experience deflation and others inflation, depending on what choices governments make. Currently governments have only bad and worse choices. Let’s hope they can choose wisely. What do you predict for the next ten years? Central banks globally have shown a predisposition to print money to solve problems. We forsee rising inflation in many parts of the world, reductions in real income as people lose purchasing power due to higher food and fuel prices and more macroeconomic volatility. Some countries that do not control their own money supply or are running pegs may experience deflation as they are forced to delever and cannot increase the money supply to counteract the weight of deleveraging. You cite the events in Greece as an example of a country continuing to run massive deficits. Is there an example of a country making a better choice? The UK is making some of the right steps to control spending, but even the UK could be more draconian. In nominal and real terms, government spending in aggregate will not be cut in the UK. Also, Iceland has made positive steps by defaulting on its debt effectively. Default is a good way to cure too much debt.
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Endgame: Road to Perdition or Rejuvenation? John Mauldin and Jonathan Tepper clearly set the stage for how to invest and profit from what they call the “Endgame.” The Endgame follows the “Debt Supercycle.” The debt supercycle refers to the unsustainable rise of debt over a period of 60+ years mostly in the private sector of the developed world that culminated into the global financial crisis that erupted in 2007-08 (pp. 8; 12; 15; 25; 40; 108). The endgame points to a crisis in the public sector debt, which (will) occur when (Western)…
Good general overview of current situation I’ve been reading John Mauldin for a while now. I’ve read other books of his and am used to his sometimes strange style that mixes serious scholarship with very colloquial language (for example, he refers to Reinhart and Rogoff, an overview of whose book gets its own chapter, as “wicked smart”) with some occasional and annoying name dropping (anybody who’s anybody in economics or investing seems to be his good friend). But the important part of the book, providing an overview of the current…
Skp the Book, Sign up for his Newsletter John Mauldin has an outstanding free weekly e-newsletter. It is one of my top 3 sources for business informatin and certainly my favorite source that comes at no cost. Hence I was eagerly anticipating his book and rushed out to buy it when it became available. Unfortunately, the book was a big let down when compared to his newsletter.Here is the positive:1) End Game looks at both sides of the flation argument, as opposed to other books that focus on just 1 or the other.2)…