Dan Morris, global strategist at JP Morgan Asset Management, argues that the US does not have a structural deficit problem, and that the real challenge is projected health care and pension spending. This suggests that US borrowing would have to grow to 250 per cent of GDP by 2040. That is not possible so the promises are unsustainable and there will be 'entitlement reform'.
Morris says this is already happening at municipal and state level in America and will come to Europe as he writes below, before considering the recent flows into equity funds plus a note on the UK GDP numbers.
Cliff version 2