According to this analysis in the Asia Times, mighty screwed. It would appear that there's nobody left to finance US borrowing. Here's how it starts:
The United States government needs to borrow US$1 trillion a year, before a new stimulus package, or handouts for the auto industry, or healthcare reform, or a dozen other spending programs promised by the incoming administration of president-elect Barack Obama. Where will the Treasury find the money?A bizarre jump in the US Treasury's real cost of borrowing points to severe market disruption if the Treasury deficit continues to rise. It appears that the Treasury market is also a victim of global de-leveraging. The new administration has far less budgetary flexibility that it seems to think. In 1981, under comparable circumstances, Ronald Reagan had far greater room to maneuver. I conclude that the new administration is virtually powerless to prevent marked deterioration of the US economy.
Lots of charts and technical things follow. I defer to Pyrrho, Karth and our other econoreaders to explain it. But the data seem very, very grim to my layman's eyes.
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Sorry for the weird formatting above--it's the new combox system. And 1:38 is me. LeeAnn
1:38 is me. Weird formatting...
Scott Walker @ 12:14 PM writes:
"Today Harry Turtledove references, tomorrow Jerry Pournelle! (I think we've already had Heinlein.)"
Where's Prince Lysander when we need him ? Right now all we've got for leadership seems to be the less-savory members of House Bronson.
Your servant,
Lord Karth
That 1:50 post was mine, btw.
EricW @ 9:01: You're quite right. The Christmas season is going to be terrible---there's no other word for it---but that's what happens. And I will further agree with you that there are going to be quite a few retail and other businesses going under or in serious pain next year. Circuit City, GM, the Mom-N-Pop Cafe, et cetera, et cetera, ad nauseam. I don't see any way around that. The debt loads and obligation-burdens of American families are at historic highs, and they are going to have to come down one way or another.
This is probably inevitable. No one has to like it (I certainly don't !), but this is what happens in a mixed- or partially-capitalist society like ours. I can understand the reasoning for the various bailouts. Nobody likes to or wants to see anyone undergoing economic pain.
The problem is that the pain is still something we have to go through. Just as for individuals, pain is the universe's way of telling us that something is wrong. It's a feedback mechanism. The reason why the current pain is going to be so harsh is that we as a society chose NOT to go through and take the necessary corrective steps---removing incentives to acquire debt, not goading people into unnecessary consumption, keeping central-government spending in line with available resources--that could and should have been taken before.
I'm not predicting Doomsday; not this time, at any rate. We have a reasonably productive economic base. Our population has a much higher ratio of productive to non-productive citizens than others do. Even our anticipated spending commitments are lower, as a percentage of our economy, than in other countries. BUT--and this is a major and significant BUT---this is going to change, and very soon. If we do not take some simple but necessary steps, very soon, to avoid digging ourselves into a deeper hole, we may well get a Doomsday scenario.
If that happens, we may well get ourselves a Jake Featherston/Freedom Party-type politician promising to solve all our problems. A certain country listened to a politician like that once, and got into a world of trouble for its pains.
That politician's name was Adolf Hitler.
Your servant,
Lord Karth
There is nothing wrong with thrift - in fact, it's essential at this point. We need to revisit "Depression strategies" for saving money. (one place to start might be with the realization that for a lot of people, having two working adults in a family is sometimes *counterproductive* economically.) Yes, businesses will fail -but the recent situation was not sustainable.
Why not return to a *truly old-fashioned Christmas* based on food, fellowship, simple gifts (even handmade or "recycled"), with an emphasis on the handmade and culturally traditional, rather than on spending?
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