See Mauldin Economics - Investment, Economic & Financial Analysis, Research The ageing of populations in advanced economies and sharp falls in workforces will make it increasingly difficult for governments to pay for promised retirement pensions and health care in the next ten to twenty years. Economic growth is unlikely to come to the rescue given excessive debt burdens of consumers,businesses and governments; falling or slowly growing labour forces;underinvestment in both business plant and basic economic infrastructure; and the reduced impact of technological change.
Countries like Germany that face these realities could cope.But many countries using Ponzi style financing may face the necessity for emergency draconian cuts in government spending as bond markets become reluctant to finance them. Possibly,a crisis in Japan which is the most heavily indebted government could provide an object lesson for all governments.
Since the entitlement culture makes people complacent about the financing of welfare states,considerable social upheaval is likely in future financial crises. Resort to supertaxes is likely to lead to decades of economic stagnation and emigration of the ambitious to youthful countries in Asia and South America which by then should offer good career prospects.