Saturday, March 28, 2009

National Bankruptcy

I have been struggling to come to terms with what exactly is meant by national bankruptcy. It seems very likely that the Us is headed that way and I'm trying to understand what the future looks like, and try as best I can to get ready for it. The interesting thing is that all the stimulus money being thrown around by the Treasury Department is making things look better and yet no one I've spoken to that thunks about these things holds out any hope that the future will see a sustained improvement. Economists are arguing over how long it will take for world's reserve currency to exhaust all it's crazy lending practices and fall to its knees and default on the trillions in debt that have been run up.
Firstly it seems clear no one has a clue exactly what will happen so it's possible some deus ex machina will descend from the clouds, enter stage left and extricate us from our predicament. More likely is that fact the pursuit of yet more deficit spending on top of all the debt that we have run up to get us to this incredible situation will destroy the dollar. And when, not if, that happens, what happens next no one knows. The problem simply put is that since Lehman Brothers went bust last year our fearful leaders have done everything in their power not to admit that every other major financial institution is bust also. This has put them and us into the impossible position of spending vast sums of public money to sustain these "zombie" banks. No one knows exactly how much has been spent or promised by the amount could be as much as 12 trillion dollars. The national domestic output of the us is 15 trillion dollars annually. World GDP is 50 trillion. That's how screwed up this problem is.
Commentators in the blogosphere (not the corporate media) compare our future to that of Russia when the country first started down the capitalist path and essentially imploded, or Argentina which wrecked it's currency less than a decade ago in wild debt oriented spending. In both cases ordinary people suffered the torments of the damned, failed systems, lack of supplies, inability to make money. Which will be bad enough in a nation used to getting what it wants when it wants it. What's worse is the impact the failure of the dollar would have on every other currency in the world that trades in and depends on dollars. No one knows what happens then.
It seems impossible to imagine, the US defaulting on it's obligations but the numbers don't lie. Common sense tells us you can't borrow your way out of debt, and the real question now is whay don't our goddamned leaders admit they know thuis as well as we do and it's really past time for a change. Pretty soon, perhaps by this fall, we won't have an economy left.

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