America is spending so much money it doesn’t have that even the mainstream press is starting to question the dogma that the U.S. is too big to fail. For example:
- CBS News asks “Who’ll Bail Out Uncle Sam?”
- Forbes asks “Is The U.S. Broke? Now that the federal government has bailed out Fannie and Freddie, who’s going to bail out the federal government?”
- The New York Post writes in a front-page story:
“The next issue for concern in the battered economy is whether there are going to be buyers for the nation’s billions in debt, Mayor Bloomberg said yesterday. . . . “Who’s buying our debt? It’s these overseas funds, these sovereign-wealth funds, these overseas hedge funds. They are in trouble now. So it’s not clear who is going to be buying” US Treasury bills, he said.”
- Reuters is covering the story of a leading Chinese state-run newspaper saying that – threatened by a “financial tsunami” -the world must consider building a financial order no longer dependent on the United States
- Bloomberg quotes a portfolio manager saying “It brings up the more troubling question of whether the U.S. government is big enough to take on this whole problem, relative [to the size of the American economy]“.
- And in July – long before the bailout of AIG and the hundreds of billions in additional comittments by the government- the San Francisco Chronicle wrote:
“As the Bush administration proposes backstopping mortgage giants Fannie Mae and Freddie Mac with a $300 billion line of credit and Congress contemplates another economic stimulus, the question is who will bail out the government?
‘People seem to think the government has money,’ said former U.S. Comptroller General David Walker. ‘The government doesn’t have any money.’
A rare consensus has developed across the political spectrum that the government’s own fiscal affairs are precarious, with an astonishing $53 trillion in long-term liabilities, according to the Government Accountability Office.”
Of course, those in the know have been saying this for some time. For example, the author of the Forbes article said the same thing years ago to the Saint Louis Federal Reserve, but the media ignored it. And Treasury and the Office of Management and Budget published a report in 2006 stating that the U.S. cannot grow our way out of the government’s liabilities, that the liabilities are quickly growing, and that failing to take drastic and immediate action would lead to very bad consequences. Of course, Congress, the White House the Fed and everyone else did the exact opposite of what was recommended.