The problem (via Bayou Renaissance Man): entitlement spending on its own eats up every dollar of tax receipts, before anything else gets paid.
19.6%: Social Security
56.7% - right now, here, today.
100% - 42% = 58%, or basically the portion of the budget that encompasses entitlements.
Entitlements consume, for all intents and purposes, every dollar of tax receipts in the here and now. Not tomorrow, not as growth in medical spending occurs, not in the future.
Right here, right now, today.
What President Obama told you is that The Federal Government has no plan to deal with this, not now and not in the future. It cannot even meet its own entitlement spending from the taxes it collects, leaving the entirety of the rest of the government, including national defense, to be put on the credit card.
You were told, today, that our government is insolvent.
Not "might become" insolvent if we don't change our ways.
The United States is insolvent, right here, right now, today, and The President announced it for all who cared to listen worldwide on national television...
It is mathematically impossible to solve this problem without dramatically cutting back on entitlement spending - by something approximating one third to one half.
That isn't going to happen (voluntarily) either.
So as an investor you are reduced to one - and only one - question:
How long will the "bubble view" of both Treasuries and Equites hold up - that is, for how long will people buy both stocks (at ridiculous bubble-spending levels where the government is providing 12% of GDP's gross amount via deficit borrowing) and bonds (funding said 12% of GDP) before those very same people have sink into their skulls The Admission The President of The United States just made on National Television: WE DO NOT HAVE THE ABILITY TO FUND THE GOVERNMENT TODAY AND STRUCTURALLY NEVER WILL, BECAUSE HE DOES NOT HAVE THE DISCRETION TO DECREASE SPENDING IN THE PROGRAMS THAT CONSUME ALL OF PRESENT TAX REVENUES.
That's it folks. That's the only question to ask as a long-term investor.
For how long does the mass-delusion last?
Nothing else matters, because when (not if) that delusion ends the valuations of both stocks and bonds are going to collapse.
Not "dip", not "recede", not "sell off."