You are correct in your analysis. The exploding sovereign deficits worldwide are the fallout from the process of governments shouldering the losses that rightly belonged to the banks. The losses have not gone away, they have just moved up the food chain from insolvent home owners, via insolvent banks and have come to rest with insolvent governments. Quantitative easing has been the mechanism that has allowed governments to postpone the pain, not facing up to the reality of cutting their expenditure and providing support in the bond market so holding down yields .
Politically it is proving impossible for any government to face reality, the US is not alone. In the UK we have an election looming. The Conservatives tried to move the debate towards facing up to the realities of the massive budget deficit, but found that their ratings in the polls slid dramatically down. Now Cameron, the Conservative leader, is back tracking and talks about efficiency savings whilst promising to ring fence this area and that area of expenditure. Meanwhile there is a war to be fought in Afghanistan and the UK troops are so poorly equipped that their American cousins have nicknamed them "the borrowers".
Whether electorates will be prepared to accept the true implications of what needs to be done is, in my view, very doubtful.
I very much appreciate your daily briefings