Tuesday, November 25, 2008

Economics by Jar Jar

Steve Sailer has had a couple posts up about how Bush helped to, more or less, eliminate credit worthiness for government backed debt, namely home loans; the result of which poisoned the world financial system (though other governments have their own culpability). So we have Bush, the last line of defense against Wall Streeters and Spend-a-holic lefties and he decides to go in with them on their bad ideas. I can't help but remember back to that horrible Star Wars movie where Jar Jar Binks demonstrated his moronic naivete by voting to begin the dissolution of the federation.

Now Obama has several ideas in the pipe on what to do that range from bad to useless. I don't think those idiots have a clue about what's around the corner. DoctorHousingBubble notes:
So every action that we take to intervene in the markets is done via two methods. One, we borrow the money which has been the status quo. The second method is printing money which given the magnitude and the commitment of funds will shortly arrive at our doorstep. It doesn’t seem like many people care about the moral responsibility of leaving a better country for those that come after us and once again this selfish egocentric give me everything now mentality is dominating Wall Street and Washington. God forbid that consumers will have to watch their spending for even one freaking holiday season. You wouldn’t want your kid to go another year without that third edition of Tickle me Elmo.

He then goes on to note that the bailouts have left around 7 TRILLION worth of liabilities on the government's books, liabilities that will come due sooner than anyone cares to think about. If I had to guess, I don't think that the 7 trillion he notes even includes the 5 trillion in liability exposure from Fannie and Freddie. Those liabilities plus the existing debt easily put us in the 150% debt to earnings ratio with our GDP. With the other coming unhandled government liabilities (social security, medicare, pensions, etc.) and more ineptitude (wind farms and bailouts) a run on the currency is hardly unlikely:
An entire generation of American policy-makers - Clinton, Bush, Rubin, Greenspan, and the Congressional leadership of both parties - has come perilously close to ruining a great nation. The creation of the credit bubble was one of the most disgraceful episodes of economic government in western history.
The author of the linked article then paints a possible rosey outcome that's based around the late September bailout liability numbers of 1.6 trillion.

I'd tell you to buy gold, but apparently you already knew that.