Tracinski - The Death Spiral

Here is the basic pattern of the interest rate "death spiral." A
country's interest rates increase, making it harder to make the basic
payments on its debt. This make lenders even more nervous, so they
increase rates even more, making it even harder to service the debt,
which makes lenders raise rates again, and so on. You want an idea of
how bad this can get and how fast? Check out this grim little graph,
which shows interest rates on Greek debt spiking from a little over 3%
to 30% in about two years. That's what a real sovereign debt crisis
looks like, and you can see how Greece had no way out without
intervention from a larger and wealthier country like Germany.

This describes what the crisis looks like, but not what drives it. What
drives the crisis is the inability to stop borrowing or to pay down the
debt because massive, chronic borrowing is built into the system. It is
built into the system because the country has adopted a massive welfare
state and bloated government employment. Government has grown so big
that the private economy can no longer realistically be taxed enough to
support it. Nor can the size of government be reduced significantly,
because so much of the economy has become dependent on it that any
reduction in welfare payments or in the rolls of government employees
causes a massive increase in unemployment and deepens the recession. So
the only alternative is to keep borrowing at high levels, year after
year-and when the government can no longer do that, the country faces,
not a mere recession, but economic collapse. When massive spending cuts
are then forced onto a country, millions of people feel as if they have
been suddenly cut off for no reason, and they are driven into the
streets in rage.

That is what the Eurocrisis is about, and under Obama, America is
setting itself up for exactly the same kind of death spiral.

http://www.realclearpolitics.com/articles/2012/10/11/the_economic_case_f
or_romney-ryan_115748-2.html

I don't know why the news talks about anything else - this is the one
bright shining object. Everything is drivel compared to this one
imperative. The fact that Ryan laid out an option, and was nommed for
VEEP as a result, is the only hopeful part of this election.