Look at equities if you want to avoid being sucked into the black hole of Western sovereign debt.American markets are back at pre-crash levels. It’s hard to imagine why.Unless you believe that the market is always right, the simple answer is: the market is wrong and we are due for a crash.No one these days seems to believe the market is right, let alone ‘always right’ and as such it should be cause for no end of worry that we are living in a fool’s paradise. Certainly the perma-bears believe the West is in terminal decline and that its markets are suffering either mass hypnosis or the effects of market rigging.It is easy to think this as it is an easy solution to a tough puzzle of: Why are the markets doing so well when their sovereigns are clearly in an inescapable spiral of debt?It’s not just Greece and peripheral European countries who can’t grow out of their debts, it’s the rest of Europe, too, as well as the US and Japan. Which country can dig itself out of troubles through growth?The answer would appear to be none of them.Yet the stock market is nonetheless rallying.What is going on?The first thing to contemplate is that there are vast oceans of money. China for instance owns about as much American money as the Federal Reserve. Then think of all the money earned by countries like Saudi Arabia and India.The world is awash with paper money, the trouble is it’s all travelling one way, from the first world to the developing world.The developing world — or perhaps we should call them “the producing world” — now ends up with the first world’s — “the consuming world’s” — money.So the money the producing world wins from the consuming world sits like a bag of Wampum traded by settlers to the fur trapping Indians — useless and at risk of debasement.These piles of money need a home and that home is the sovereign debt of the consumer nations, especially the king consumer, America. The Wampum flows back to the West — thanks in part to the weak governance structures of the producer nations like China, Russia, India, etc, where law and property rights are somewhat sketchy.The obvious easy place for the developing nation producers to stick their money is consumer sovereign bonds, but one by one first world sovereign creditworthiness is imploding. It doesn’t take a genius to work out at some point other western bonds are going to do a Spain/Greece/Ireland/Italy/Portugal-style face plant.So, the money runs to Germany, France, the UK and the US, primed to bail out of the next sovereign bonds that start to look shaky.This isn’t a sustainable path for bonds — for a start the diversity pool of reliable paper liquidity shrinks all the while the established havens get riskier and more expensive.It’s a classic hockey-stick-bubble-bust dynamic.So if you are thinking ahead and trying to avoid getting sucked into the whirling black hole of Western sovereign debt, where do you stash your trillions of cash?Part of the answer is equities.Even if you don’t hold a cataclysmic view on sovereign debt, it makes sense to move from zero-interest-rate bonds to blue-chip equities, especially ones with global exposure. Buying a global multinational is in effect buying a multicurrency bond with a dividend, inflation hedging and upside to global economic growth baked in.Every late spring, the bottom falls out of equities and this is blamed on “sell in May and go away” behaviour. Alternately it is, as I believe, a rebalancing event where portfolios of the producing world are rebalanced — it is in effect a global economic seasonal event.This year’s impact was less severe for the stock market than the two previous events in 2010 and 2011. This is because there is a shift slowly to equities in the diversity strategy of the giant producer creditors, as a recovery continues in the US and the horizon for rising interest rates and inflation creeps closer.The answer to the puzzles of how the consuming West pays off its debts, is of course, by paying them back in new paper money, however much of it needs to be printed.The value of the consumers paper money thereby falls, as does the value of its debts in terms of hard assets. As such, hard assets are bound to appear to rise in terms of money and semi-hard assets like equities rise alongside them.In this economic reality of macro government intervention, of sovereign producer versus sovereign consumer, nothing happens quickly, so this transit could well see a long-term rally in equities stretching out into next year or longer.There has to be a caveat, of course.Europe could toss us all into the ditch again — it is, after all, fighting a political battle for Federalisation. Economics comes a distant second in European conflict, so we can’t hope for a quick economic resolution or even one at all before the new ‘federal Europe’ rises.For now at least, as bond yields in Spain and Italy fall, it will take a new shove of Euro-insanity to kick off a new global market correction. This of course is hardly unlikely, so a bull needs to be prepared to run for cover at a moment’s notice.It is now uncertainty that is the main enemy of the economies of the world, something the politicians should work hard to try to remove.Expect the opposite.Clem Chambers is the CEO of the leading financial information and investors website ADVFN.com and author of investments guides and the ‘Jim Evans’ financial thrillers, the latest of which is available for pre-order on Amazon now.