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Sprott Asset Management Raises Concerns Over US Government’s Financial Viability

October 27th, 2009 Michael McDonough

In a monthly investment strategy letter written by Eric Sprott and David Franklin of Sprott Asset Management titled ‘Surreality Check… Dead Government Walking’ they convey their concerns over the US government’s ability to finance its growing burden.  In the letter they clearly state:

The United States Government is on a trajectory to default on their obligations. In its current financial condition, it will not be able to fund its forecasted budget deficits and unfunded Social Security and Medicare promises on top of its current debt obligations.

In a similar letter in 2007 Sprott warned of the eventual bankruptcy of GM along with the risks associated with Fannie, Freddie, and Citi.  Now, however, the company claims the risks have shift from the private sector to the government as it continues to assume more and more  financial liabilities.  As Sprott put  it:

It’s time for another surreality check, but this time it isn’t the publicly traded companies that deserve attention, it’s the governments that have saved them. Make no mistake-–the dead men are still walking-–they’re just a lot bigger now than they were two years ago, and they don’t generate earnings-– they print money and tax their citizens.

See the full letter here

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