Stanley Druckenmiller isn't a household name. He isn't nearly as well-known as George Soros even though he significantly contributed to Soros' success. He is also one of the 300+ hedge fund managers Insider Monkey tracks. This weekend in a WSJ article, he said that he isn't worried about technical default and that he is long treasuries. He thinks the market knows the difference between a technical default and a Greek-style real default, so he doesn't mind waiting a couple of weeks to receive his interest payments as long as it means massive cuts in entitlements. "One of the reasons I bought the Treasurys a ways back was I thought [House Budget Chairman Paul] Ryan was serious. I mean I heard some serious things that I hadn't heard in a long time," Druckenmiller said.
These statements clearly show how clueless Druckenmiller is about how Washington works. The number one rule of democracies is that it is easier to give entitlements than to take them back. Unless the government is literally on the brink of a real default, it is nearly impossible to significantly cut entitlements. This is why Greece and other European economies are in trouble and it's very likely that we will go through the same process within 10 years or so. Republicans won't be able to make a significant dent in the entitlements older people will be getting. One way or another younger people have to pay for this inter-generational Ponzi scheme.
Any voter who is older than 50 years old won't accept entitlement cuts and will vote to delay any potential tax increases. There are nearly 100 Million of them in 2010 and a majority of them cast their votes. They are also represented by powerful lobbyists such as the AARP. Anyone who expects to reform the entitlements in a meaningful way is a dreamer.