Unsustainable

As we have talked about in the past, the U.S. has totally relied on borrowing money from China, Japan, Arab countries, etc.... In essence, we have borrowed ourselves rich. This would be no different than you or me going out and using our credit cards to buy new trucks, furniture and houses and then inviting all our friends over to show off all our new stuff so they can believe we are doing "really well". Then, to keep the charade going, we just keep taking out cash advances on new credit cards to make the payments on the existing ones. That works really well as long as someone keeps offering us new credit cards so we have access to new cash. But what if that source of new credit were to one day just vanish? We already know the answer to that....the whole house of cards would come down... and it would unravel very fast.

It's interesting that the U.S. government had a bond auction last week...but it had to be postponed as there was not enough interest....which means no one showed up.

Also, we talked about it in class last year, but if the U.S. loses it's credit rating and we have to start paying 10% interest to the world instead of the 5% interest that we are currently paying....we will be "unsustainable" about 200% faster than we currently are.

Now today, we read these words from our Harvard-educated, Commander in Chief;
“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”
Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

Read full article here; http://www.bloomberg.com/apps/news?pid=20601087&sid=aJsSb4qtILhg&refer=worldwide

For obvious reasons, Mr. Obama chose the word "dampening". If, in fact, no country chose to lend us money any more....the correct phrase would be, "collapsing effect on our economy." Let's face it....the charade would be over and the end of this great country would "come like a flood".

Thank God that He has this whole situation firmly in his hands. If he didn't, it would be very hard to watch all this and not be brutally depressed.