Lawrence York

Added Debt Won't Rescue the Great American Ponzi Scheme

I think the author is dead on in his assessment that more debt is not the cure of America's financial woes. I would additionally add that US unrealized debt will amplify as the US is forced to repatriate the fruadulent securities it packaged and sold around the world; as GNMA's losses are realized, and as a wave of credit card and auto securitizations go bust. Indeed the solution is also a problem. The big bang will come when the US government completes its transfer of bad debt to the Treasury and the world, en masse, concludes that private securities are the place to be as government guaranteed securities are a complete illusion. The answer then, is a for sale sign--selling US private sector assets to foreigners in any amount they desire.

U.S. Debt Watch: Paths to Repudiation

It is unfortunately the case but we have time. China our largest creditor is trapped--one the one hand they know it and don't like being overconcentrated in US Treasuries nor getting puny interest rates and on the other until their own economic crisis dissapates they can not afford to let their currency appreciate. The US therefore has time but the clock is ticking. First order of business is to stablize the economy and stop the job losses. Second order is to create jobs through small business and circumvent the money center banks by direct lending to small businesses. Thirdly we must build confidence by working together. Hearing the rebuttal of Obama's address and knowing the Republican agenda of keeping dysfunction until the 2010 elections, I think the author is correct but would say the probability is greatest for hyper inflation to pay off our debt in cheap dollars. With this plan the Congress can still bring home the bacon to their constituencies.