America Is Not Too Big to Fail
Friday, September 12, 2008 10:19 AM
In the 1978 blockbuster Superman, Lois Lane falls from a rooftop in New York. The late actor Christopher Reeve, decked out in blue tights, swoops down to catch the falling Lane.
"Easy, miss. I've got you," he says with a trademark grin.
"You, you've got me? Who's got you?" replies Lane, looking down over his arms to the pavement below.
We could ask the Lois Lane question of our own government these days. They're stepping in all over the place to dig out banks and save investors. Yet the world's biggest economy is in no shape to write those checks.
In fact, the United States is harrowingly close to the same kind of utter financial collapse that Americans once thought only shaky Latin American regimes could suffer.
The Fannie and Freddie bailouts, monster entitlement programs for retiring baby boomers, Wall Street in flames, and sliding home values are coming to a head at exactly the wrong moment.
The chances we'll be able to muddle through are slimmer every day.
"The earthquake will come via a collapse in the market for U.S. government bonds as domestic and foreign investors realize that the only way Uncle Sam can meet his future spending obligations is to print massive quantities of money," warns Boston University economist Laurence J. Kotlikoff, writing in Fortune.
"The result will be sky-high inflation and interest rates and, most surely, a prolonged reduction in output and employment."
"This could happen today. It could happen tomorrow. But it will happen here just as it has happened in every other country that tried to spend far beyond its ability to pay," he writes.
http://moneynews.newsmax.com/streettalk/us_debt_collapse/2008/09/12/130153.html