Break out the Depression Glasses to toast the Obama Administration’s latest foray into economic disaster. Just posted on WSJ.com:
BREAKING: The Federal Reserve and other central banks open a credit line to send dollars to Europe to ease debt crisis.
Yes, folks. Your taxes are going up, your kids are going deeper into debt, to bail out lazy, overpaid, spoiled Greek socialists. Thank your president.
The U.S. move follows a panicked decision by EU leaders to pump hundreds of billions of $$ into failing socialist economies in Europe to avert a global economic collapse.
But the scheme may not work.
The problems in Greece, Spain, and Portugal (and Japan, Ireland, and elsewhere) result from too much government debt and too much government regulation. The countries offering to fund this $650 billion emergency fund are already deeply in debt. In other words, this is just the latest attempts by socialist governments to borrow their way to prosperity.
In 2008, governments moved debt from underneath Shell A to underneath Shell B. Now, they’re moving debt to Shell C, the last shell in the game. It looks to me that governments around the world are in an all out panic. They see the shell game crumbling. They’re running out of tricks.
Related news stories highlight the problem. Bloomberg reports that banks no longer trust each other, which is driving Credit Default Swaps (CDS) to record levels.
The interest rate that financial companies charge each other for three month loans in dollars is the highest since August, while traders are paying record amounts to hedge against losses in European bank bonds. Yields on all types of corporate bonds rose last week by the most relative to government debt since Lehman Brothers Holdings Inc.’s bankruptcy in September 2008, according to Bank of America Merrill Lynch indexes.
Moody’s, the debt rating organization, says that a Greek-style crisis could his America as soon as 2013, according to Investors.com (HT Drudge Report).
But under more adverse scenarios than the CBO considered, including higher interest rates, Moody’s projects that debt service could hit 22.4% of revenue by 2013.
“While we see limited risk of a U.S. sovereign debt downgrade in the next 2-3 years, beyond that we cannot be so certain,” wrote Societe Generale’s economics team in a recent report.
The Tea Party happened because ordinary Americans sensed something horribly foul in the air steaming out of Washington, DC. That acrid smell was socialist-driven debt. And it’s only gotten thicker since then. The White House is imposing policies designed to weaken and break small businesses and to socialize large businesses until there is nothing left but government.
Stop them. Stop them now. Stopping them is why we created Ensuring Liberty. Join us today.