THE WHEELS ON THE BUS

Now, I'm no economist, but I read two articles in the New York Times today that make me think the wheels are coming off of the bus.  And that someone somewhere that knows something about this stuff needs to act quick.  

The first reported that financial giant Lehman Brothers is days away from collapse, and, as it did recently with Fannie Mae and Freddie Mac, our government will likely provide the billions of dollars needed to prevent it from going under and triggering broader collapse.  It also reported that many more financial giants are headed down the same road -- both AIG and Merrill Lynch are facing imminent collapse and need billions of dollars in capital to survive.     

The second is an editorial reporting that the terms of the Fannie & Freddie bailouts are not being placed in the federal budget.  Essentially, this means that the government has committed to spending a whole lot of taxpayer money but won't tell taxpayers how much or where.  I sense that this is because they suspect that inserting the figures will show the public just how serious the problem is, which would cause everyone to panic and make matters worse.

The first article states:

"The spreading troubles were the latest sign that even the government’s extraordinary interventions into private enterprise during the last year have not been enough to halt the unraveling of storied companies that were widely viewed as unassailable until recently."

This is the scary part.  All of these companies took huge risks and used debt to grow way beyond their means.  They were all viewed as unassailable until the debt grew so big that it brought everything tumbling down.  And isn't this exactly -- and I mean exactly -- what the US is doing right now?

Our budget shortfall this year is more than double last year's, and projected to get worse next year.  With not one, but two expensive wars going on, and less revenue coming in because of huge tax cuts, one has to wonder how we can afford to pay off hundreds of  billions of dollars in interest each year towards our growing $9+ trillion dollar deficit, nevermind pay off the debt itself.

Much like those companies were able, we keep borrowing on our reputation: "We are the US and we are unassailable."  But if they were once unassailable and debt killed them, what does that say for the government whose financial borrowing practices those companies were simply following?