Sovereign Defaults?

Rather than default and money printing to pay down debts, I see a spread of austerity. In Japan because their debt is domestically held. If yields rise, the govt. forces banks to hold debt, but has to cut back on spending. In the U.S., austerity will take the form of higher taxes, state spending cuts, and a shrinking trade deficit.

However, the trade surplus countries China, Japan, and Germany will be competing more fiercely than ever for the shrinking global export market. They will fight to devalue their currencies. China, especially, faces the threat of inflation if they continue bubble blowing.

Austerity = deflation.