As we have discussed on this blog through many different commentaries, the debt burden throughout the world in private companies and even sovereign states and nations, cannot be maintained and will likely result in various financial collapses in the coming months. Some of these will be routine and small while others could be catastrophic for economies around the globe.
Did the Dubai default just send up a warning flag for what is to come for others in the near future?
"Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill."
"Nervous traders transferred the focus of their anxieties from the risk of companies failing to the risk of nation states defaulting. Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket."
Will our young King see the California IOUs, New York saying they will be broke by the end of the year, plus this Dubai warning flag and drop his reckless and insane plans to borrow more money for another "stimulus" and his plans to skyrocket the debt through government health care? No!
The federal government is currently spending 1,5 trillion dollars a year ( $30 billion a week) more than it is taking in through its revenue sources. That is 30,000,000,000.00 per week!
Let me put it another way. We are borrowing about $100.00 per week for every man, woman, and child in the US. So each week every family of 4 goes into debt another $400.00. Do you think this will not have serious consequences, either in inflation or even, in the worst case, default on this debt?
And this is not enough. The Airhead wants more debt while again trying to have it both ways by making comments about how this debt burden is unsustainable.
Hey Obama.... if racking up this debt is unsustainable why are you actively working to rack up new debt by job killing programs that will skyrocket the deficit to levels that could result in default by the US Treasury?
At his next press conference see if you hear anything from the King that would satisfactorily answer this question. I've not heard it yet, and I'm betting we won't hear it in the future either.
You think the economy is bad now? Just wait until the full consequences of this mountain of debt manifests itself. Man I hope I'm wrong about this, because if I'm not, it's not going to be pretty.
J. Cogburn

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