Sunday, March 20

The precipice approaches.

There's a huge psychological reflex in humans to rationalize unavoidable dangers. We convince ourselves that "it can't happen to me," or simply avoid thinking about them altogether.

Example: A large number of countries are coping with exploding debt. Those closest to the precipice are Greece, Ireland, Portugal and probably Spain, but the U.S. isn't far behind.

Okay, you probably don't want to read any more of this because...see the first paragraph. But try to hang in for a bit, because informed voters can make a difference, even if small. And at this point ANY help would be welcome!

Consider three numbers: 12.4, 9.8 and 7.8. Those are the interest rates that the governments of Greece, Ireland and Portugal are having to pay to borrow money (i.e. 10-year government bonds). By contrast, the U.S. is *currently* paying around 3 percent.

Problem is, as a nation's insolvency draws closer, the interest rates go up--which means you have to pay out more interest. Which of course makes the insolvency problem worse.

In the case of the U.S., *right now* we pay enough interest to China to cover the entire cost of the huge Chinese military. And as interest rates inch upward, so will our payments to them.

Got the picture?

Unfortunately there is no painless way to solve this problem. But one great idea would be to avoid making things worse. This means electing people who will cut government spending-- and cut it a LOT. Democrats won't--and will consistently lie by promising that OH YES, they're really, reeeaally serious about cutting spending.

Don't believe it. They're liars, and particularly on this topic.

But half of Republicans aren't any better. So the key is to grill candidates hard and only vote for the ones you trust.

And then pray.

And a postscript: The governments of Greece, Portugal and Spain have shown no signs that they plan to cut spending. Which means they'll default on their debt. Which will cause investors and portfolio managers to take a more critical look at their sovereign holdings. Which will cause U.S. interest rates to rise.

Which will advance the implosion date by a few months.

Again, I wouldn't publish these things if there was absolutely nothing that could be done to mitigate the misery. But there is: Elect true conservatives at all levels of government. Throw out all big spenders, and those who lie about cutting spending to get elected.


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