But there is a more immediate threat looming up behind us like a great tidal wave. The American economy is in desperately fragile condition. Obamas profligacy has substantially hastened the day of reckoning when the economy will begin to really break down. The deficit is so high and projected to remain so high that it cannot be long until foreign countries fail to buy into our debt structure. The debt is growing at an almost geometric rate. The situation in Europe is at least as shaky and perhaps more shaky than the situation in the United States with the PIGS on the verge of default, Great Britain in desperate shape, and Iceland already defaulted. Most ominous of all, China is clearly at the tail end of a real estate bubble that makes Fannie Mae and Freddie Mac seem to be exemplars of prudence. If the Chinese real estate bubble bursts, the collateral damage will be felt in every country of every continent. The analysts like Goldman Sachs predict 8 to 11% GDP growth in China this year. If that fails watch commodities crash again followed rapidly by the extraction countries like Australia, Brazil and Canada which have grown fat on the China trade. Thereafter, huge trading partners with China such as the United States will also suffer. No one will escape.
Whatever the cause, there are simply no reserves left for us to rely on in another contraction. One cannot say whether it will happen at all, or if it does whether it will be deflationary, deflationary first and then in inflationary, or stagflation. Even if those bullets are dodged, the best many analysts foresee for America is a long depressing slog much like that which has confounded the Japanese for more than a decade. That means High unemployment, low growth, increasing government deficits and debt; that means all government nostrums failing on Main Street.
Any one of these scenarios presents an opening for demagogues on the left which they will not fail to try and exploit. We see Obama already turning class against class and demonizing, Hugo Chavez style, the productive side of the economy.
That is not to say that we have no hope. The next computer, the next telephone, the next automobile, are already being dreamed of in somebody's basement. We are in a foot race for the next new thing before the same old kind of tyranny chokes freedom and the entrepreneurial spirit out of us. The human spirit will strive on unless the strivers are put in real or psychic cages.
