In the financial world, STD stands for Still Taking Debt, in this case, US debt. We have a list of countries that we’ve been willing, nay, begging to share our STDs with but in the past few months, these countries have sought treatment. Why, because the disease finally became symptomatic.
According to an article in the National Review Online Hedge funds, investors and countries are getting rid of long term US Bonds like so much Chlamydia. The burning sensation is here and as a result, the list of people willing to buy US debt grows thin. Normally OPEC, China, Japan, and The Federal Reserve are the top buyers of US debt but with Japan needing to rebuild and China actually running a trade deficit last quarter, the only one who hasn’t seen the late night Valtrex commercials is the Federal Reserve.
Many times we view financial crisis talk of this nature as something that will screw us over 5, 10, even 20 years from now but bear in mind that people dumping long-term U.S. debt are either buying debt that matures in less than a year or taking their money out of the debt market completely. The countries and investors that were willing to hang out with us, despite the STDs we gave them, have left us at the bar to fend for ourselves. At this point, in order to get someone to buy us a drink (I.E. more of our debt), we’re pulling a Brittany Spears and flashing the cash and prizes…or lack of cash as the case may be.
Anyone with a checkbook realizes they’re going to have to boil us before they sleep with us.
The reward in buying debt is the interest paid on it, from the borrower to you. If the borrower has gotten so desperate for more money that even OPEC is looking friendly enough to take home from the bar, it’s a pretty safe bet that they don’t have the money to pay back the principal, let alone the interest. We no longer look like Brittany Spears but rather a meth addict with gaping open sores; there is no Trojan Man to save us.
Looks like we’re just going to have to save ourselves.
Boiling, in this case, comes in the form of deep and fast spending cuts. We’re not talking about the pathetic $5 Billion here or $61 Billion there; we’re talking about cuts in the Trillions and before the end of the year. Yes, it’s going to hurt, badly; but not as bad as it would should the debt bubble burst suddenly. If Chlamydia goes untreated, it can lead to infertility; if our debt runs rampant, we will not be able to reproduce American financial success.
What does this physically mean? It means that services the government provide need to stop or be drastically reduced. There’s always a list of what departments can and should be shut down but there are concerns that the needed cuts will lead to even higher unemployment numbers. The government was never supposed to employ so many people that shrinking it was cause for alarm. So when it comes to our choice of who to lay off, we need to understand what, exactly, we need the government to do. Fact is we need the military. It doesn’t matter how many times we’ve failed to balance our checkbook, there are bad people out there that won’t care if we call a time out to open up Quicken. What we don’t need, want, and can’t afford are the social programs the government provides. We can’t afford to care if chocolate milk is in our schools or not and we have neither the time nor the inclination to subsidize 5.8% of NPR. Stop. Writing. Checks.
When an outbreak occurs, seek medical attention immediately. Valtrex; it’s about suppression…U.S. Debt; it’s about recession.
The Brazen 3 