Monday, April 13, 2009

Here's your shot of pessimism for this week 

Digby refers us to two articles today:
First one by Stirling Newbery says don't look for the American economy because you won't find it:
Taking out the defense and financial sectors, and the unemployment rate in the United States isn't the headline 8.5%, but is, in fact, closer to 15% and marching upwards. There is no domestic economy for all practical purposes at this point, other than what is needed to extract every loose dime from the American public to pay off debts.
And Numerian at the Agonist says this isn't going to end well
. . . When the financing tap is finally shut off by the bond markets, we’ll start making our first interest payments on this new debt. It will come in the form of much higher long term interest rates, a weaker U.S. dollar, an inability to import cheap Chinese goods, and declining living standards. All this will happen because the U.S. will have eaten its seed corn. Its businesses will have been shorn of their retained earnings. Consumers will have depleted the equity in their homes. The ability of the federal government to raise taxes and protect the good faith and credit of the U.S. will be shot . . .
The U.S. will be approaching peak oil and water shortages at the very moment it runs out of financial equity and taxing power. It will be an ugly situation . . .
So what do we do, cash out the pension and head for the hills? Well, I suppose there's nothing wrong with being a little more self-sufficient...

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