Will the government go bankrupt?

Does the black cloud of a depression hang over the nation?

Recession blues got you down? Well, there is some good news; the United States government can't (and won't) go bankrupt. It says so right here:

The NYT has a good discussion of how the United States government has been out front in criticizing other governments for not allowing financial institutions to go bankrupt, but is now rushing to rescue Fannie Mae and Freddie Mac from failure.

One item the piece gets wrong is its discussion of the risk of bankruptcy by the U.S. government itself. This is essentially zero, since the U.S. debt is denominated in dollars. If the United States ever had difficulty paying off bonds held by foreign central banks, it could print as many dollars as necessary to make the payments.

The mass printing of dollars would of course be inflationary and would mean that foreign central banks would get paid off in dollars that are worth much less than the ones that they lent, but they have already been happy to take large losses on the money lent to the United States. For example, the dollar has fallen by almost 50 percent against the euro since 2002, yet foreign central banks are still willing to lend money to the U.S. government at interest rates that are well below the inflation rate in the United States.

The foreign central banks presumably are willing to absorb such large losses because they want to prop up the value of the dollar in order to maintain an export market for their goods. As long as foreign countries cannot figure out how to create domestic demand for their output (it actually is not very hard for those who have read Keynes), they may find it worthwhile to lose large amounts of money on their loans to the United States in order to maintain their export markets in the United States.
- Dean Baker at American Prospect

Of course, this doesn't mean that you won't go bankrupt.

current-events

Happy Birthday, US of A

Caught in the crossfire in a fierce battle near the village of Al Faysaliyah,
Army medic Pfc. Joseph Dwyer carried an injured Iraqi boy to safety.

GI in Iconic Photo Dies of Overdose
July 03, 2008
Fayetteville (N.C.) Observer

PINEHURST -- Joseph Patrick Dwyer, a former Army medic who became famous after he was photographed helping a wounded Iraqi boy, died June 28 from an apparent overdose. He was 31.

In March 2003, then-Pfc. Dwyer became a symbol of heroism.

In the first week of the Iraq war, photographer Warren Zinn snapped a picture of Dwyer spiriting a half-naked, wounded Iraqi boy to a makeshift military hospital.

As quick as a shot, the photo traveled around the world on the front pages of newspapers and magazines. Dwyer, who was at first misidentified as Joseph DeWitt, became an instant celebrity. The photo of the grimacing boy cradled in the arms of a hustling soldier had mass appeal.

Dwyer, however, was uncomfortable in the spotlight. He tried to deflect the fame back onto his unit. He told reporters that he was part of a team that was trying to help wounded Iraqis that day.

"To be honest ... I was embarrassed by it," he told a reporter in 2005.

A few years later, he would be in the news again. But this time the coverage would be less flattering.

In October 2005, Dwyer was charged with discharging a firearm in a municipality, a misdemeanor, after a three-hour standoff with Texas police.

Dwyer, who suffered from post traumatic stress disorder, told a Newsday reporter that he was firing at imaginary Iraqis. He thought they were preparing to attack his apartment.

"I know I don't need to be carrying a weapon," Dwyer told Newsday in 2005 from a hospital where he was being treated for PTSD. "And I'm scared of going home without having one, even though I know probably nobody's going to attack me."

In the Newsday story, Dwyer and his friends also admitted that Dwyer abused inhalants.

Bottles of prescription pills and Dust-Off, an aerosol computer cleaner, were found near Dwyer when police entered his home Saturday, said Capt. Floyd Thomas of the Pinehurst Police Department.

Dwyer had called Sandhills Transportation on Saturday night to take him to the hospital after an apparent overdose, Thomas said. When the cab driver arrived, Dwyer was lying on the floor. Dwyer told the driver he could not get to the door, according to the police report.

The driver called police, who kicked in the door of the Longleaf Drive home at Dwyer's request.

"Help me, please," Dwyer told police through his front door. "I'm dying. Help me. I can't breathe."

After being loaded into an ambulance, medics performed CPR, according to the police report. He was pronounced dead at 7:48 p.m. at FirstHealth Moore Regional Hospital.


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In happier news, Bush has signed the new GI bill, which was included in the new Iraq war funding bill. The GI benefits were included despite the bitching of the Republicans about the cost.

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And this last, forwarded by a friend, George Carlin's take on our fair Republic:

"I came across this quote today in one of Amy Goodman's recent columns.

"It felt like a gift from George, through Amy, not because
it will make us laugh, but because it's so true and on our Fourths,
what is more meaningful than validation?"

"We were founded on a very basic double standard. This country was
founded by slave owners who wanted to be free. Am I right? A group of
slave owners who wanted to be free, so they killed a lot of white
English people in order to continue owning their black African people, so they could wipe out the rest of the red Indian people and move west and steal the rest of the land from the brown Mexican people, giving them a place to take off and drop their nuclear weapons on the yellow Japanese people. You know what the motto of this country ought to be?

"You give us a color, we'll wipe it out." - George Carlin

Ah, George. We hardly knew ye. May he rest in peace.


current-events

Why We Fight, Part III

In case you missed it:

Big Oil and the War in Iraq

"IT TOOK five years, the deaths of 4,100 US soldiers, and the wounding of 30,000 more to make Iraq safe for Exxon. It is the inescapable open question since the reasons given by President Bush for the invasion and occupation did not exist, neither the weapons of mass destruction nor Saddam Hussein's ties to Al Qaeda and the Sept. 11 terrorist attacks.

"The New York Times reported last week that several Western oil companies, including ExxonMobil, Shell, Total, BP, and Chevron, are about to sign no-bid contracts with the Iraqi government. Western oil had a significant stake in Iraqi oil for much of the last century until the government nationalized the industry in 1972. The Associated Press quoted Oppenheimer & Co. analyst Fadel Gheit as saying he believed the contracts were a first step toward production-sharing agreements. "These companies are in it for the money, not to make friends," Gheit said.

"This of course blows a hole in another ancient Bush fallacy, the one in which former Defense secretary Donald Rumsfeld said "the oil wells belong to the Iraqi people" and former secretary of State Colin Powell seconded him by saying Iraqi oil "will be held in trust for the Iraqi people." Former Deputy Defense secretary Paul Wolfowitz once claimed there was so much oil in Iraq that "When it comes to reconstruction, before we turn to the American taxpayer, we will turn first to the resources of the Iraqi government." - Boston Globe

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This time next year, you should be able to fill up your monster truck with Iraqi oil, if the bank hasn't repo'd it yet.



current-events