Reality always wins

This is something I say quite often, especially when I hear "perception is reality". Perception in the US political class is everything, but for the rest of the world, the reality of our economic condition and future prospects are what matter. Although the US economy is still one of the few economies in the world that's productive and globally significant, we are not shielded from reality and immune to financial collapse.

Our statist system is infected with the hubris of power, and the power elite have developed a mindset that America can continue to borrow and spend without consequences. There are constitutional limitations, which as we've seen have been surpassed, and then there are limitations placed on us by reality, which can't be surpassed without immediate consequences. America has tried to surpass the limitations placed on us by reality, so we can expect consequences.

Who bails out the world?

http://www.spiegel.de/international/europe/0,1518,693317,00.html

This is a very good article about European and U.S. debt. The authors bring up the danger of solving debt problems with more debt. Hopefully the world has had a wake up call and the necessary cuts in spending will take place, but we also need economic growth -- statist policies in many of the countries have created an environment good for workers but bad for business -- unfortunately, it's business that creates wealth.

This is an ominous quote:

The "alarm bells should be ringing loudly" in the United States, says Ferguson. He points out that historically, large empires like the Roman Empire and the Chinese Ming dynasty also fell into decline because they had overextended themselves economically.

Warnings like this help explain why US Secretary of State Hillary Clinton defines the crisis as one of historic dimensions. She has argued that the deficit and debt should be viewed "as a matter of national security, not only as a matter of economics."

It's ominous for two reasons -- first, it suggests the U.S. could collapse -- second, it's scary when progressives place economic problems in terms of national security.

It's clear the U.S. has got to make changes, and make them quickly. There's enough wasted right now in Washington D.C. to keep cost-cutters busy 24/7. Plus, we've got to find a way out of the two wars which are driving us further into debt. If we haven't accomplished our military goals by now, we never will.

Finally, we have to set the market free. The world needs a free market zone and America would be a good spot to do just that.