$12,000,000,000,000.00 in debt by next summer....

It began after World War I. The defeat of Germany and its allies and the carnage that it took to achieve that victory led the victors to place onerous reparations on the German Republic. Reparations so terrible that when John Maynard Keynes read the peace agreement he predicted another world war within 20 years. He missed it by one year.

After the Axis powers were defeated in 1945 the United States was determined that the practices of the past would not be exercised again. There were to be no reparations paid by the defeated nations. The US actually stepped in and strong armed several American businesses to stop manufacturing certain products so that Japan and Germany could have an economy. The one that springs to mind was the government forcing Honeywell to give up camera and lens manufacturing so that Nikon, Canon, and Leitz could have a chance to get on their feet.Ever since this happened the government has taken on itself the role of benevolent savior of the American and other nations economies. It was the beginning of the global economy. The pressures placed upon United States Steel to give up certain specialty steel productions so that the vanquished could return to the steel business.

Fast forward to the 70s and our work to get Japan, Inc. and Germany, Inc. have done better then our wildest expectations. The first hit is Chrysler. It is one corporation. They had by bad management, terrible decision making and so many other ways shown how stupid they were.

What was the argument to rescue Chrysler? Why they were too big to let fail. They were too intertwined in the economy to let them fail. If we let them fail people would suffer.

Everybody remember the 80s the fake boom of the junk bonds and S & Ls. The talk about the great economy under Reagan. It was an illusion. A wall to wall illusion that was not real. We found that painfully so when the S & Ls started rolling up like so many window shades.

What was the argument to rescue the S & Ls? They were too big to let fail. They were too intertwined in the economy to let them fail. If we let them fail people would suffer. Anyone besides myself beginning to see a pattern starting to emerge?

In the late 90s Asia had taken on too much debt and they faced a sever long term liquidity crises. Guess who bailed them out? Guess what the reasons were?You got it.

Now we come to this latest crises. We begin by first looking at the debt. The US Government has been spending the tax money that was supposed to be dedicated for Social Security and there is none of it left. The kindest estimate I have seen is for Social Security alone as part of the debt is now $7,000,000,000,000. As more and more people retire that number will grow and grow. The economy has flattened and that is adding another 2 to 3 trillion dollars to the debt as Uncle Sam’s credit card is maxed out.

Now comes the latest bailout. Do I have to repeat the reasons why we are once again being asked to bail out more big businesses failures? Except now even by Washington standards we are being asked to go into debt on a scale that no nation has ever seen before. No matter the measuring device raw numbers, debt per capita, debt per GDP or GNP this will be the larges debt ever held by a nation.

The present crises is not an economic crises it is a financial crises. The massive debt is an economic crises. It just hasn’t come knocking on the door yet. It will though. It most certainly will.

I oppose the bailout. I am in total agreement with Sebastian Mallaby who wrote “A Bad Bank Rescue”. Whenever the government comes to me and says they have to act and act now I immediately want to say, “Whoa”. We have to say whoa and everyone should be demanding it.

What the banks need are to be re-capitalized not have their bad loans taken over. The US government needs to step in and say we back the banks to the hilt, but untangling this mess creating by the banks and the investment banks is their responsibility. They screwed it up they get to unscrew it. Paying out over one trillion dollars though is nonsense.

Doesn’t anyone besides myself find it odd that with less then 50 days to go till the election the banks suddenly screamed failures?