Congress has finally come up with a bill to stabilize the countries finances and the stock market is up at the moment. Don't count on this to last very long. The Chinese have directed their banks to shun American ones and a lot other countries are looking very warily at this country.
In the good old days we were able to laugh at Argentina or some other smaller country at their economic foibles. This time we are the ones caught with our pants down. Huge debts and liabilities loom before us and the country has underinvested in all manner of infrastructure for years. Who will furnish the funds to rebuild this country? We have been relying on foreigners to the tune of $2 billion per day.
These foreigners have already seen the value of their US assets fall like a rock. These foreign countries look to the US as a safe haven in times of trouble. They have lost big time on the USA. The Saudis $800 B sovereign wealth fund - ouch. We rely on Chinese investments in US Treasury bills so we can spend what we can not afford and to make promises to our citizens to that we have no way to keep.
These countries are not going to keep showing up the Treasury auctions to support our government and its banana republic may of controlling its finances. Right now everyone is fleeing into Treasuries from stocks, bonds and other assets in search of a safe haven. When this tide ebbs who will be buying this debt? Who will furnish funds so that productive businesses can borrow? The only way to attract these funds will be higher interest rates, much higher.
People have been warning for years that this implosion was coming. Our former Controller General has been warning of a catastrophe for years.
Video Link
Instead politicians keep putting Christmas presents under the tree, leaving the bills for our kids.
It may be too late to land this plane as said on this recent Glenn Beck blog.
Link to DEFECON2
Act 2 is going to suck worse than Act 1.
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