Great News!

So my earlier post about worldwide bankruptcy was apparently alarmist. Obama has just assured us that he plans to cut the budget deficit to only $550 billion by the end of his first term. Well, that's just lovely news.

Never mind that that number is still higher than any budget deficit until this year's, which should run around $2 trillion. Assuming an arithmetic rate of reduction, that means that Obama will only leave us about $4.5 trillion deeper in debt than when he started, by the end of his first term. Even Bush was only able to do about $1.1 trillion of damage in his first term.

Worldwide Bankruptcy is Already Upon Us...

...We're just hoping we can close our eyes and ignore it till it goes away.
A couple of shocking articles in the past couple days reveal the extent of the crisis.

For years, America's financial condition has been deteriorating far more rapidly than the official numbers would suggest, as bad as those official numbers are. See, the problem is that the US government does not report its assets and liabilities the way that every other entity in the US is required to. under normal accounting rules, we are now $60 trillion in the hole, as you can read here.

Here's an excerpt:
" 'In the seven years of GAAP reporting, we have seen an annual average deficit in excess of $4 trillion, which could not be possibly covered by any form of taxation,' Williams argued.

'Shy of the government severely slashing social welfare programs, federal deficits of this magnitude are beyond any hope of containment, government or otherwise,' he said.

'Put simply, there is no way the government can possibly pay for the level of social welfare benefits the federal government has promised unless the government simply prints cash and debases the currency, which the government will increasingly be doing this year.' "

In short, we're already bankrupt. Sorry, Obama, a stimulus package ain't gonna cut it.

As if that weren't scary enough, the Telegraph reports here that the shockingly rapid collapse of the over-leveraged Eastern European economies, propped up by Western European banks, spells almost certain insolvency for the Eurozone countries--and that sooner, rather than later.

Evans-Pritchard warns:
"Whether it takes months, or just weeks, the world is going to discover that Europe's financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus....
The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan – and Turkey next – and is fast exhausting its own $200bn (€155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights. "

Looks like we might finally solve the Third World Debt crisis...though the collapse of the entire worldwide credit system is certainly a steep price to pay.