...it's that we are very, very close to the maximum amount of debt that the U.S. can afford to issue to finance our government. Our national debt now closely approximates the entire Gross Domestic Product of the U.S.economy for an entire year. Our debt amounts to about 20% of the Gross Domestic Prouct of the entire world economy for a year. The number is scary its so large.

Even though the members of Congress resist PayGo requirements, would like to continue to use earmarks and fund pork-barrel projects, act as though military spending is simply a "given", and so forth--things are going to change in Washington. And if I'm right, the changes will be big time!

The financial markets will discipline our elected officials--and us--by exhibiting a reduced appetite for buying our debt. Put in very simple terms, the events that resulted in the terrible situation in the credit markets have badly damaged both the creditworthiness of the U.S. as well as our ability to provide leadership and influence to world financial markets. The effect of that will be that our new President and Congress will be forced to operate government on a balanced budget basis. There will be only two ways to accomplish what the financial markets will force us to do--raise taxes or dramatically cut government spending.

We won't like either one.