Monday, February 23, 2009

Is America The Richest Nation If Hillary Has To Beg China For Money?

Most Americans still do not get it. Almost a year into the financial collapse, most people still seem to think that this is just a "temporary downturn" and that good times and prosperity will be here again as soon as soon as the politicians and the bankers "fix" things.

But this is not just a temporary economic downturn.

This is the collapse of the pyramid of debt that the United States has been building for decades.

The truth is that the very foundational structures of the world financial system are crumbling, and once they fall they will not be able to be put back together again the same way.

But most Americans still believe the myth that America is the "richest, most powerful" nation on earth.

If that was true, would Hillary Clinton need to plead with China to continue buying U.S. Treasury bonds? The reality is that China and other nations have been lending us obscene amounts of money, and they are getting tired of funding our outrageous national debt.

There are some media outlets that are starting to wake up a bit. The San Francisco Chronicle is now saying that this economic crisis "is as bad as they come". But most in the media are still content to call this crisis a "recession" or to talk about how "temporary" these problems are.

Meanwhile, the Feds have come up with yet another new plan to save the banks. You mean the trillions of dollars they have already committed haven't fixed the problem?

Some banks that have been bailed out already now need another bailout. For example, the U.S. government could soon own as much as 40% of Citigroup's common stock as part of a plan to bailout that troubled bank.

But what about all the small banks that are in trouble?

Well, they aren't important enough - the Feds just let them die or get gobbled up.

That is exactly what happened to an Oregon bank that just became the 14th banking chain to fail in 2009.

The reality is that we have a gigantic mess on our hands, and people are hurting because of it.

Some areas have been hurt more than others. For instance, Las Vegas has edged Detroit for the title of America's most abandoned city.

Some housing markets have seen almost a free fall in prices. The median price of a house in Southern California is now back to $250,000, which is a 50 percent decline from the peak in 2007.

And every day while this goes on the citizens are getting angrier and less content.

In fact, things have gotten so bad economically in the U.K. that police fear mass protests and a "summer of rage" as citizens get even angrier about the current economic crisis.

Hopefully things can get stabilized and that we won't see that type of thing happen either in the U.S. or the U.K.

The truth is that the massive "bailouts" we are seeing in the U.S. and the U.K. will stabilize things for the short term, but they are all being funded by borrowed money, so they will make our long term problems even worse.

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