Collapse Is Inevitable

The bell is tolling for the US economy and any bailout now will only postpone the day of reckoning. Only after bad debt and economic chicanery (as in Madoff) are purged and the catharsis of cleansing takes place can true recovery begin. Until then, TARP and the automobile company (UAW) bailout are forestalling catastrophe but in so doing, feeding inflation with the potential even for hyperinflation approaching levels of Wiemar Germany or Zimbabwe. The financial institutions simply could not be allowed to fail because they underpin the entire economy. The financial system had to be buttressed to sustain all the other industries which were contingent on it. Inconsistency in saving some firms but allowing others, as in the venerable Lehman Bros. to fail, fed the instability. Markets need predictability and investors can't afford chaos. Foreclosures are in some cases the sole fault of the borrowers, but other unwary home buyers were duped and deserve some consideration from government. As for GM and Chrysler, they had such legacy costs that the UAW had to make concessions. There may be a case for some level of protectionism where currency manipulation as in the Chinese Yuan has taken place and where the American worker faces competition from what is essentially slave labor. Automotive workers and others laboring in manufacturing can and should not be expected to work for slave wages such as those provided by companies in China, Vietnam, and even Mexico. The green and New Deal-type measures Obama is proposing have no prospect of bringing the nation out of recession and Obama's suggested tax cut is too small and directed too narrowly to cure what ills.