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No seriously...stop. The US Kamikaze

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Feb 4, 2010 1:35 pm

At what point do people in positions of control (the Fed, federal government) start paying attention? As a social liberal (not one of those Tea Party psychos), even I am looking around and saying enough is enough. A brief read of this article and it sounds like the US is ripping the playbook straight from Japan. Quantitative easing with diminishing results, increased government stimulus to create jobs, government taking on more and more debt to solve problems that are caused by debt. Sound familiar?

For God’s sake Washington, the government as well as the people need to delever. When you are in debt, you don’t go out and get another credit card to max it out hoping that you can solve your fiscal disaster. It has been said both colloquially as well as in many, many academic reports that you don’t solve debt with debt. If you don’t look at Greece, then at Japan and shiver in fear you are not paying attention. We either suffer moderate pain now, or crippling pain later. There is no longer a painless option.

We are not at the point of no return yet, but we are getting perilously close. If at some point a ratings agency actually puts the pieces together (or stops being bullied) and takes a realistic look at the size of the national debt and obligations including off balance sheet entitlements and actually downgrades the US debt rating, we are going to be in a world of hurt, and we will bring most of the developed world down with us.

Now, I don’t really know a whole lot, so I don’t really have answers to the problem (and really  I hate when people complain with no solutions). However any reasonable person can see that you shouldn’t try to put out a housefire by blowing gasoline through the fire engines hoses. The poor decisions being made are either incompetence or knowing officials acting desperately, neither are particularly comforting. In the words in one of my friends outside the business, “dude, get your s*** together”.

There, now I feel better.