Via ZeroHedge, an excellent read in the form of Willem Buiter’s Global Economic Review. Doomsday scenario would be one way to describe it but it is a truly comprehensive ‘must read’ document for anyone even remotely interested in global economics. Snippets from Zero Hedge’s highlights :

Unless the US, the UK, France, Japan (currently AA rated) and even Germany change course quite radically and sooner rather than later towards a sustained higher degree of fiscal tightening, there may not be a single AAA-rate sovereign  left 5 years from now.

For the US, with a structural primary deficit in 2009 of 7.3 percent of GDP, the arithmetic of solvency indicates the need for at least 7.3 percent of GDP worth of permanent fiscal tightening (not counting the long-term fiscal tightening required to accommodate future age-related public spending ambitions). For the UK, with a structural primary deficit in 2009 of 6.8 percent of GDP, the required permanent fiscal tightening (beyond what is achieved automatically by a cyclical recovery) would be at least 6.8 percent of GDP. In neither country are policy makers debating how to achieve anything like these degrees of fiscal tightening. In the US, beyond the expiration of part of the Bush tax cuts, no additional fiscal tightening has been planned. With the policy makers in denial, the fiscal situation is likely to deteriorate further, with the result that the magnitude of the permanent fiscal tightening that is required, when the markets eventually demand an immediate fiscal adjustment, will keep on rising.

We argued earlier that none of the major industrial countries was likely to choose an inflationary solution to its public debt problems, but that of the US, the Euro Area and the UK, the US was least unlikely to pursue such a course of action. The country also has form as regards using inflation to amortize the real value of the public debt, as is apparent from Figure 10, taken from Reinhart and Rogoff (2009b). It shows that, historically (since 1790), the US has exhibited a tendency to respond to high public debt burdens with high inflation.

An inflationary solution to the problem of an excessive public debt is all but impossible in the Euro Area and unlikely in all advanced industrial nations. It is least unlikely for the US.

I thoroughly recommend all 68 pages of the actual report (pdf).