My guess is China will take Taiwan as the first payment..

Amen, Ian.

this is the absolutely gloomiest post to date ian

what do you think we should expect and how to prepare?

As you say in the first paragraph - that is the “simple” view of “Americans”.

You mean we don’t have all the money in the world?

“I can’t be overdrawn - I still have checks…”

We sold the farm in order to party on.

And, by the way, a nation that refuses to tax itself is not a good credit risk.

On the brighter than nothing side, I put up an Oxdown diary on the equity requirement of the bailout bill.

It doesn’t work that way? No wonder I keep getting those zombie phone calls

Digg!

In other words looks like the U.S.A. in in for some ‘tough love’ from the international community.

So, as I understand it, one of the key problems is that bankers don’t trust each other and therefore won’t loan to each other. But now that we’ve gotten rid of mark-to-market, there’s no point of getting rid of the trash assets; other bankers will suspect even the good stuff of being trash. What am I missing?

You’ve been slipping into darkness, pretty soon you’re going to pay.

-G

Our best chance is that the $700B is enough to hold the creditors off until we get a new administration. If Mr. “No Negotiation” McCain were to be elected, the lines of credit would immediately disappear, I’m sure. Our best hope is that there is enough goodwill remaining that Obama’s SecTreas can negotiate something less than Draconian repayment terms.

All our progressive hopes and aspirations have been mortgaged off… Universal healthcare, etc…!

Good evening, Ian.

Well, you have delineated REALITY with your usual exquisite precision.

How long ’til the folkes get the message?

I sincerely hope there is a great repository of skills, knowledge and capacity floating around out there , in ‘Merkah, because, methinks, that most people in this country haven’t a clue as to what is coming our way.

How long has it been since this nation actually produced any real wealth?

Yes, Ian, for more than thirty years I’ve have been saying that there is nothing of substance behind the facade of our gluttonish ‘economy’ but apparently that concept was simply beyond the grasp of most people (including a significant nimber of economists who preferred to ‘believe’ that ‘it’ had all been successfully ‘figured out’ and the ‘economy’ would go on indefinitely, if not forever, needing but minor ‘tweaks’ to keep things rosy).

I blame George W. Bush, and will forevermore

Unless the ‘tough love’ as mentioned by wigwam @ 10 includes dictates that we adopt centralized healthcare.

I can dream, can’t I?

Ideally Obama should say that given the economic crisis, we have to adopt a universal healthcare system to save money. but i doubt that’ll happen

While a nasty recession is definitely going to continue, I do see some grounds for optimism should there be the political will in the United States that could free up huge amounts of savings and investment capital. A relatively small tax increase on the rich (up to late Clinton levels) would raise a lot of money. The health insurance industry absorbs 15% of GDP, with very little return in terms of increased health, compared to other industrialized countries (5% to 10% of GDP). War and Military and “security” spending approaches $1 trillion per year. And the finance/usury industry soaks up and exports untold trillions from productive investment. I understand the dire nature of what Obama will inherit, and do not diminish in any way the political challenge of tapping these revenue pools, but even in its current straits there is no economy in the world that can generate the kind of power that the US can.

Nothing goes on forever. The problem is that people (not just Americans, Ian) want the cycle of life to stop at a particular moment of well being. So long as that is the expectations, the rude awakening is there to be had. OTOH, recognizing the fallacy and allowing the cycles to proceed with no demands will go miles to change attitudes.

((( Ian )))

I blame Canada, with their fancy Health Care, Education and Social Safety Net !

As usual, we may assume that the ‘devil’ shall take the hindmost first.

Gee, I wonder whom ‘that’ might be?

In this case, I do wish he might do a ‘trickle-down’ accounting.

Maybe we could get the ghost of St Ronnie to pimp for such a plan?

You will remember, I trust, that the country believed him, utterly and completely, when he said catsup was a vegetable …

The problem with being powerful is that you can put off the moment for longer. Poor and weak people are forced to live in the real world. Rich and important people can keep the real world at bay. If the money lasts, they can keep it at bay more or less permenently. A lot of Americans won what I like to call the “death bet.”

“This can’t go on forever, but it’s sweet now, and I’ll be dead before the bill comes due.”

That’s exactly what I fear! Especially with Big Pharma’s stranglehold on the Congress…! :-(

Agreed. There are definitely things that could be done, if the political will exists.

Another great post Ian. Will we eventually devalue the dollar to weasel out of some obligation, or will we let massive inflation do it for US?

My guess, actually, is that the US will get socialized healthcare, probably within 10 years. However, because you will be poor, you will get the cheapest version - a national health system, a la the UK. It’s still far better than what you’ve got now, but it’s definitely the junker of socialized health care plans.

Damn Canucks have to show us Merikans the way, again…!

One possible correction … The Indians don’t own much of America’s debt … not like the Trillions that the Chinese and Japanese have anyways …

hey - stop bad-mouthing my possible future home!

Make the whole country one big Ice Rink and let’s play some Hockey ! *g*

IMHO, we cannot afford decentralized healthcare; it’s too expensive. (I know it sounds crazy to people raised on Reaganomics, but the U.S. pays twice as much per resident for inferior care, compared to the average industrialized nation.)

I don’t know. The current plan seems to be “a bit of both”. Dollar devaluation is mostly in the hands of your creditors, and in your hands to the extent of “what can we do so the Chinese don’t dump all this?” Inflation is dangerous. It’s definitely one solution set, perhaps the only “standard” solution set left, but inflation is like fire - a great servent, but a terrible master. And it is very very hard to control once you deliberately set it free.

LOL … how’s it goin’, jayt ?

I believe Indian citizens hold a lot. Could be wrong, but I recently saw a list that put them at third. I’ll have to look into it.

I know it used to be:

China
Japan
Korea

Btw, I see that both the Leafs and the Oilers are in their usual position… Last place in their respective divisions…! ;-)

I think that would be the Repubs’ intent … give Americans a crappy health care system like the Brits, then say,
“We told you so !”

I suppose we’ll see how much input Elizabeth Edwards got soon enough …

The US can’t really afford to repay. A deal needs to be made with the rest of the world that makes them admit they aren’t getting most of it back, but which helps both them and the US. “You can have vengeance and poverty, or you can have forgiveness and prosperity”.

What money is also probably needs to be redefined so it isn’t just the property base. More on that another time.

Not much. Though I’m not sure that trust is the issue. But if it is, then this plan doesn’t really work, does it? That’s the problem, on its own terms this makes no sense.

Oh okay, yes Indian citizens have a lot … their government, not so much …

Ian, what’s troubling is, India has used the American blueprint for their growth and they have hyper inflation right now …

Ahem, Petrocelli …

(Always great to ’see’ you)

The number of Canadians on this here ‘Merkan thread has been noted …

Are you guys up there gonna put up a fence to keep us ‘lower’ life-forms in our ‘place’?

Bet y’all start pretendin’ we ain’t even here.

it’s all good…

umm, where’s the *warm* part of Canada?

No, you can’t put it off, no matter what you are “worth”. you only think you can, and even believe it only happens to the other guy, like the USA.

Bush is more or less running on the economic policies of Saint Ronald.

*cough* … that would be South Beach … *g*

Ummm… The Parliament building in Ottawa…? ;-)

There is an unfortunate correlation between the warm(ish) parts and the expensive parts.

Vancouver? Probably the warmest clime, eh?

Oh, plenty of people put it off and died before the bill came due. Sometimes you can put it off.

Someone always pays, but it isn’t always you. That’s the problem, people think they can get away with it, put it off on other people. In fact if you want a one sentence description of what’s wrong with the economy it’s “people pushing thier costs onto other people”.

Do they? India’s one of the places I haven’t kept track of at all.

Ummm… The Parliament building in Ottawa…? ;-)

There ya go. Those folks should look into annexing, say, the west coast of Florida….

I agree.
It seems to me that the lack of a national health plan leads companies to other countries to build factories, because those countries have a nationalized health system.

Also the southern interior of BC. Southern Ontario is roughly at the same latitude as northern California - hot humid summers and shorter winters than in some parts of the country - though they can get some pretty heavy snows because of their proximity to the great lakes.

((( DW )))

Nope, we know there are more good Murkuns that bad ‘uns … even though most of the good ones tend to sit on their hands …

In my field of yoga/meditation, I know that positive thinking is only as good as what actions you are able to initiate and I sincerely hope the great work done here and on other Blogs will help to get Americans moving towards realizing the dreams noted in The Constitution.

The ‘death bet’.

Excellent, yes, several generations won that, quite happily.

And most folks think it still operational.

Ah, but karma …

Life often gives the ‘test’ first and the ‘lesson’ afterwards.

Who could have imagined that ‘Merkah, with all its ‘exceptionalism’ would fall ‘prey’ to such a thing? It is so unfair ….wah!

All our progressive hopes and aspirations have been mortgaged off… Universal healthcare, etc…!

just not true ctuttle, universal health care funds itself, it’s not “an entitlement”, it needs to payed by the employer plain and simple

our infrastructure, same thing, we fund it ourselves through our own sweat and tears, and alternative fuel…pays for itself

I do NOT want to see obama make believe this affects the investments we MUST make toward our future

one of the reasons we’re in trouble is we don’t produce anything anymore, well, that’s gonna have to change

Although an atheist, I say AMEN!, to that thought-inspiration, Petro.

;~D

Excessive debt is “a jealous God, visiting the iniquity of the fathers on the children, and on the third and the fourth generations.”

Quite disconcerting, considering their PM is the most educated World Leader ever and the Communist Party was a main part of the Gov’t for 3-4 years.

Their main Bourse was at 21,000 points in Jan and is currently at 12,500.

Inflation is around 18 - 20% and they used up about 1/3 of their foreign reserve …

another thing ian;

this is by design, I forget who said it but it goes;

“want to shrink intitlement?…create a debt large enough to scare everyone out of funding them”

or something to that effect

we cannot allow that mentality to stop us from building our future

Attaturk makes a rare daylight appearance…

Ishmael makes an excellent point about the amount of money the predatory lenders suck out of the economy. I am seeing a ton of it among my new bankruptcy clients, and it makes me sick.

One major step is to tax financial people to death to force them to move money into productive industries.

While some of these things have been going on for decades and others began under Clinton, there has been an exponential exacerbation under Bush. As I have tried to chronicle in my scandals list, Bush did not have a few reverses here and there. His disasters were across the board and ate deep into the fabric of government. It wasn’t just that he had disasters. He went out of his way to have them even when they could have been avoided with a little foresight. But what really sets him apart from merely poor Presidents was his uncanny ability to choose the one course of action that would magnify a disaster into a catastrophe, take it, and persist in it. And all the while he did this, and he did it over and over, his Administration, the Congress, Democrats, and the media backed him up all the way. Yes, there was some grousing at the edges but just look at the votes and the reporting.

What we have seen is a political culture not simply irresponsible, even foolhardy, but suicidal. Unfortunately, our political class means to take us down too.

universal health care funds itself, it’s not “an entitlement”, it needs to payed by the employer plain and simple

I couldn’t agree less. Healthcare is the responsibility of society toward the employed and unemployed alike, as well as their families.

Not to mention that employer-funded health-care would create huge competitive disadvantages for American companies.

I’ve heard the opposite … that they are at a disadvantage to other countries because they have to pay so much for private health insurance

for wigwam and fern

universal health care needs to be funded by empoyers, this includes those out of work

fern, we are not competitive because we allow products sold in the states from companies that don’t pay their own bills, those products must face a tariff if they are to be sold here

if a company does not provide health care for it’s labor force, tariff, if they polute the air, tariff, if they allow slave and child labor, tariff

we ARE competiitive once we REMOVE the rediculous “free trade” doctrine and replace it with the “FAIR trade” doctrine

just as a company has to pay to maintain it’s own equiptment, it must also pay to maintain the labor force and the consumers

this actually costs them less by the way

they get buying power and are able to get laborers to work for less then if they had to pay enough for the labor force to afford it themselves

we are at no disadvantage to other countries once we force them into paying their own bills

they MUST pay their own bills if they want to sell their goods here

1) enough pay for healthy food on the table

2) enough pay or compensation that provides health care for the laborer and their family

3) enough wage to allow for vacation

4) enough wage to allow for retirement

5) enough wage or compensation to pay for education through college

these ARE the expenses of industry, there must be this kind of compensation otherwise they are not paying their own bills

now, after a certain wage, the company can offer compensation instead of health care, the individual will voluntarilly opt out of the health care plan

for instance, if my wife has my family allready covered, or if I can prove I have health insurance othewise, THEN AND ONLY THEN can I opt into salary compensation instead of health care.

anyone is entitled to add to their health care or pay more for a differant plan

this is the way it’s done

I couldn’t agree less. Healthcare is the responsibility of society toward the employed and unemployed alike, as well as their families.

I agree, it’s the responsibility of society, society is funded by their industry

society WILL be funding health care when we force industry to pay for it as one of their bills

just like electricity, it’s one of their bills, just like cleaning their crap out of our air, it’s one of their bills

So Ian… without wanting to contribute to triggering a run on banks, would it follow from what you’re saying that it would be prudent to begin a gradual transition of one’s holdings into non-USD-denominated stuff, as an arbitrage against large and/or long-term USD inflation?

A most well-honed synopsis, Hugh.

The Political Class has, indeed, betrayed us.

Let that truth be remembered as our shrunken, shriveled future unfolds.

It will be interesting to see if the ‘Democratic’ portion of the Political
Class shall claim it was ‘intimidated’, ‘threatened’ or ‘blackmailed’ as many apparently ‘believe’ was the case.

No doubt the d’s shall make little effort to clarify these ‘myths’, as it provides a cultural ’story’ which will, most likely, become the stuff of legend.

However, regardless of what happens to the majority of the human beings in this nation, the Political Class will, no doubt, remain comfortable if nor quite comfortably ‘above the fray’.

The wealthier r’s of the Political Class (hmm, whom might those be?) will retire to some safe haven, someplace else, surrounded by the latest ’security’ systems, provided by a grateful nation, to live out their years, comfortable, serene, happy and much-respected elder statesmen.

Ian,

As accurate and succinct a summary as ever written. You should op-ed it around — maybe do a YouTube?

My scenario is a prequel to your thirty years — from the post-war era when America allegedly had 80% of the gold reserves of the world. That gold bought prosperity, right up to 1971, when Great Britain trotted up with 3 billion U.S. dollars and said, “We’re redeeming this for gold.”

At which point, Tricky Dick knew that game could not go on; thus, he trashed Bretton Woods. The gold standard was dead, for all practical purposes. The U.S. dollar, floating on a sea of oil was the world’s reserve currency: “as good as gold!”

Until it wasn’t.

The seeds of disaster were sown and the triffids matured in your thirty years.

We all share the losses. Can we all get a seat at the profit table?
The Chief Thief doen’t share profits.

I have said for some time, if we were to have an overthrow from within by enemies, and then to enumerate the actions this president has takn, to her demise, and use them in a novel, that novel would be dismissed as pure trash, the american people would never allow so many clear and obvious actions against this state

we have been overthrown and the man in charge is working for the other team

Yes. Bush was it on steroids. But it didn’t start under him. He, however, is the man who broke the system. Run carefully it should have made it longer.

The US already has employer funded healthcare and it is a disadvantage. General taxation for healthcare, combined with single payor would reduce the burden significantly over a period of about 10 years, to about 2/3rds of what the per capita cost would have been otherwise.

run carefully, new industry such as alternative fuel and cooling the planet might have made it perpetual

I am increasingly convinced that our nation’s Aristocracy - that upper-one-half-of-one-percent that Bush claims as his “base” - is in favor of the collapse of the American Republic. I’m not kidding. I think that some influential people look at the collapse of the Soviet Union, and they start to think about how well they could do if America broke up into collections of smaller nations.

They look at the breakaway former Soviet Republics with envy, and the kleptocracies that seized control of the former national resources with undiluted greed. Why be an influential South Carolina businessman when you could instead be the King of the United Carolinas? Why be Governor of Texas when you can be First General of the Texan Nation?

And no few of them probably anticipate how much easier it would be to undertake a program of ethnic cleansing

I like the idea of general taxation for health care, this always translates into the employer funding it though

I would rather make it clearly funded by the employer, I would like them to be able to buy into the single payer plan with the option of buying a private plan that may be a better deal for them since there’s competition

I also like the idea of the employee sharing the expense with a token tax which then funds those unemployed

this would be called;

“social security”

oh, wait

That’s fucking terrifying.

The predatory and payday lenders have taken over loansharking from the Mob the way governments and corporations drove them out of the casino business. Like Joe Pesci said in Casino, “It turns out that was the last time that street guys like us were ever given anything that fucking valuable.”

The cash flow generated by quasi-taxes such as driver insurance premiums, which is then invested in the markets and lent out with interest by the insurers is another huge source of capital that could be tapped by the use of public auto insurance.

That would be the ones who are the descendants of the bastards who reentered the Union unreconstructed and unrepentant, who came back into the congress intent on destroying the country from within. That corresponded with the founding of that wonderful fraternity up at Yale that turned out the idiot in chief and his progenitors.

We won’t need to worry about the right wing privatizing Social Security anymore because Bush and his boys have basically made it a fait accompli with the unsustainable budget deficits and off budget flings.

November 5th can’t come fast enough as long as the junta doesn’t plan on implementing its dictator fantasy.

I am increasingly convinced that our nation’s Aristocracy - that upper-one-half-of-one-percent that Bush claims as his “base” - is in favor of the collapse of the American Republic. I’m not kidding

I have said from the start, they are robber barons, they want the haves and the have nots

it’s not the wealth, it’s the devide they want, they want there to be as big a differance as possible between how they live and how we live

Even an ‘apparent’ or ‘pretended’ or ‘alledged’ DEMOCRACY is anathema to those who despair the loss of the feudal system.

But they are doing their absolute ‘best’ to rectify the situation.

As long as the public was obsessed with its ‘comfort’, and somewhat ‘comfortable’, the aristocracy could operate in broad daylight, even as we’ve witnessed these last few days, their minions have been hard at work to serve the true masters (even if the minions pretend not to realize it).

Ain’t this fun?

I suspeculate its more fun, even, than blowin’ up frogs, ya betcha!

We won’t need to worry about the right wing privatizing Social Security anymore because Bush and his boys have basically made it a fait accompli with the unsustainable budget deficits and off budget flings.

we have to reclaim those middle class assets, they have been stolen and they have to be re-apropriated, taken from those who have it and put back where it came

Those ‘assets’ should be reclaimed, perris, but … ’tain’t gonna happen.

The scum done got clean away with ‘it’, perris, and Justice is going to be real busy ‘elsewhere’ …

And Pragmatism don’t give a damn …

Ian,
While you are in the main right, there are alternatives. Will we take them, I doubt it.

We could- Insure every American under Medicare and increase the tax on the top 1% to pay for it. Resultant increase 13% to 15%.

We could- Regulate the markets requireing no more than a 5 to 1 leverage. Result- fewer Billionairs.

We could- Give States the power and the cash to build High Tech Transmision / Distribution grids.
Results costs 100 billion dollars paid for by eliminating all Oil Company rebates.

We could- Give every American a 100% take credit for installing solar power units on their houses and selling the excess electricity back to the grid.
Result costs 10 billion dollars paid for by increased tax revenue from workers building the units over a five year period.

We could- give ever American a 100% tax credit over 5 years for buying a plug in electric car. Cost 88 billion paid for out of not buying 700 billion dollars in imported oil per year.

Yes we could do some things that would grow the economy, increase tax revenue and put us on track to pay off some of our debt. But will we. Not likely with spineless Democratic leaders like Harry and Nancy leading the Congress.

It would take a revolution of the average American deciding to HOLD OBAMA’S FEET TO THE FIRE after November the 4th. Will we? Probably not. Phill Grahm may have been right. We may just be a nation of whinners instead of a nation of patriot.

Time will tell.

Another thing that is not infinite is the land. Anybody looked down from a plane repeatedly over the last two decades. There is a gigantic land-munching machine at work, and the munched parts are starting to touch. If munching land is the prime way that you know of to make money, and that is the only function that you see land performing, well, does Mother Nature have a surprize for you! So does the economy, the next time you try to feed yourself or attract tourists on the premise that you have anything left worth looking at. (Upstate New York, I’m looking at you!)

Just like FDR, we are going to have to “make” Obama do what must needs be done.

We’ve no choice, Spokane.

Excellent concrete suggestions, by the way, and most useful in the dialogue we ALL must engage.

We shall see what time will tell.

But we are Exceptional!! Sarah and John say so
!!!!

Hahaha. I never give investment advice. However, I would say that anyone who works in the US and lives in the US has enough US exposure.

Oh yes, there are solutions. I just wonder if the US will take them while there’s still time to make them work fairly easily.

shhhhh!! perfectly good houses and good growing land for under 100K are easily bought here in CNY. shhhh/ Vermont’s nice but a bit expensive so off to Syracuse soon? But the farmers are wiseing up there and see a bountiful crop with global warming making fortunes on the farms there.

“a bit of both”

I just watched tonight’s SNL parody (if you can really call it that) of the Bide-Palin debate. OMG I laughed myself silly. It was amazing.

Funny thing was they were pretty much just reading off the real debate.

Maverick! Heh

The Ultimate Moral Hazard

Framing the present intranational credit crisis in terms of the much larger problems we have with our international credit habit is quite appropriate, but take the analysis the next step. Look how we’ve responded to the smaller problem so far. Kleptocracy as usual. Not even an attempt to face any reckoning, or deal with the underlying problems and root causes — we’re just going to borrow another $700 billion to fork over to the usual kleptocrats, in a plan that doesn’t even begin to promise to solve even the immediate problem of economically vital credit markets seizing up.

If this is how we respond to the internal credit crisis, what sort of response will we come up with as our foreign creditors apply ever stronger and ever more overt pressure on their deadbeat debtor, the US? The history of prior banana republics instructs us that faux-populist, hyper-nationalist demagouges will seize the opportunity to rise to, or retain, power on the backs of a scheme to nationalize foreign-held debt. And, while an Argentina can’t get very far with that, the world’s sole hyperpower very probably will be able to make it work. The repudiation of debt will not, of course, be called that. It will be sold as making our creditors finally pay the just price for all of that protection against global terrorism we have impoverished ourselves to pay for, in the form of our huge “defense” expenditures. And they will be compelled, under pain of the US Navy stopping all of their international trade, to continue fresh payments indefinitely into the future. We won’t have the problem an Argentina had after repudiating foreign debt, of not being able to get further credit. We’ll just convert the transfer of wealth involved from nominal loans to actual tribute.

Have you lived in a socialized health care nation? For example, the UK?

The best measure of health care is the lonevity of the citizenry. The UK has better longeevity that the US, and spends the same percentage of GDP as medicate in the US for cradle to grave health care for its whole population.

A major component of health care is public health, clean water, childhood immunizations, pre-natal care, and housing for the homeless. Health care is not hooking up eldery terminal patient to an expensive ICU and draining the money out of their bank accout.

A good health care system does not have doctors coming out of medical school $200,000 in debt and being able to reture after 10 years on the job. A good health care system does not have 6 clerks for every doctor, 3 in the doctors’ office and 3 in the insurance companies, fighting about money. A good health care system does not have cascading levels of profit centers, the incurance company cut, the drug company cut, the hospital comapany cut, and the doctors’ cut.

As Obama said, the US does not have a health care system. It has a disease care system

“How long has it been since this nation actually produced any real wealth?”

Dude, so TI was Taiwan Instruments? And IBM was India Business Machines? And I guess Apple was originally Pomegranate, and surely the Japanese founded Microsoft… :)

Ian, another exceptional post. Sadly, time zone differences make it difficult to interact directly here, EPU’d again.

It is also appreciated that comments are overwhelmed by the conspiracy theorist crowd pandering their demagogic pabulum. Demagogic illusion is not a substitute for knowledge. Usurping facts to the service of opinion can be a dangerous illusion and dilutes the authority of fact.

Ignorance of economics is the fountainhead of the forces that brought the country to the present state; ignorance of economics will not resolve any economic issues necessary for survival.

Once Sovereigns were schooled into the exercise of economic forces necessary to maintain themselves and the state or to find such council if they knew they were deficient. With either a Republic or a Democracy, the requirement for such schooling is no different, to the contrary is of greater importance to the state. It has been a deficiency unobserved and unappreciated. It is probably too late in the day to obtain the necessary education to address the necessary issues, the noise of the demagogues already fully overwhelm all sage council, those in authority ignorant of the need of sage council and unable to discern such wisdom from the clamoring pack.

All the hallmarks of the current bailout have their antecedents in the exercise of state terror upon their populations, this one is no different, to gain advantage for a few against the best interests of the population. The ideology driving such acts is not only bankrupt, but an aggregation of economic bunkum unequaled in academic history. The heist of treasure alone, is real, as will be the consequences.

Ian, would it be possible for you to privately e-mail me with your e-mail address using my login info here? I am not particularly fond of comments being hijacked and put into service of conspiracy theories as some here are wont to do.

Have we already killed the hostage?

People have been warning for years that the world has been carrying our public debt and negative balance of trade, despite both having passed beyond sound creditworthiness, because the US is “too big to fail”. Our creditor nations hold too many assets tied to the value of the dollar for them to want to see the dollar crash, and too many tied to the value of the US stock market for them to be willing to risk those valuations in the course of toughening up on their further lending, or letting the dollar find a truer valuation. In effect, these assets have been our hostage against our creditors getting tough with us.

How much of the value of these hostage assets is now gone? How much of it was tied up in CDSs and other nth order derivatives and hedges that are now probably not worth the paper they’re printed on?

If the answer is “most”, or even “a whole lot”, then maybe we are approaching the day of reckoning with our foreign creditors and purchasers. We’ve already killed their hostages. They no longer have any reason to send good money after bad, by further lending to a nation that seems determined to live beyond its means.