Tuesday, May 11, 2010

Jane Smith, Vallejo, California, Greece, the United States, the World

The United States, through its "investment" in the International Monetary Fund and Chairman Bernanke's spreading of U. S. dollars all over the European Union like flies on shrimp, and the Union itself has helped "save" the little economically-meaningless socialist-high-spending republic of Greece.  A trillion dollars has been committed to backstop the failure of Greece to pay its bills, which many believed could have led to Portugal and Spain's sinking like rocks.  Not unlike the U. S. government's purported saving of the U. S. financial world through TARP.  But no matter what the world and Obama might believe, the fault is that a person, a city, a county, a business, a state, a country or ultimately the world cannot forever spend more than it makes.  A person can only as long as someone will loan him or her money to pay his or her bills.  Ditto, a city, a county and so on.  But if the person doesn't have a job that brings in more than is spent, ultimately lenders will decide not to loan any more.  Or the lender might run out of money to lend.  Then what?  The world is in process of discovering "then what". 

Take it up a notch.  The United States of America, like many homeowners, like many banks, like General Motors, like California, Illinois, Ohio, New Jersey and New York, like Greece, is spending way more than it takes in.  The U. S. government is "saving" its Jane Simth homeowners by lending borrowed money to them.  Cities and states are in more of a pickle than Jane or the U.S. because most cannot run deficits.  Accounting chicanery has saved many of them to date.  GM was saved by $50-some-odd billions of taxpayer dollars and borrowings from the U. S.  Greece this weekend was granted a trillion of bailout dollars from the EU, IMF and the like.

The United States has been saved by its citizens' loans and a variety of countries lending it money, especially the People's Republic of China.

But none of the above have committed to getting a job, reducing spending and increasing revenues.  What if, what if, they never do?  Politicians clearly want reelection to their cushy jobs instead of not being reelected to their cushy jobs.  President Barack Obama will NEVER cut spending he gives to his various voting and financing constituencies, for example.  And he seems to be ideologically unable to support the health and growth of business, the only ultimate source of recurring revenues to the country.

What if, in a decade or less, the leaders of the People's Republic of China, socialist to begin with, decide they need votes to retain their power?  What if they, too, start spending more than they make?  What then?  What if there is more spending all over the world than is taken in?  What if there simply isn't enough money?  Is it too ridiculous to imagine?

Is it?

We are on our way.

No comments: