Richard Rahn is questioning, Could the U.S. become Argentina?
Well, literally, not really. That name is taken.
But please read the article anyway. Please read it in conjunction with Mish's post today devoted to Wm Black's testimony to Congress, Geithner and the NY Fed Accused of Willfully Ignoring Fraud and Covering Up Lehman's Bad Assets by Senior Regulator During the S&L Crisis.
A take-home message for me in the Mish post, enhanced by reading the entire Black testimony (linked to in the post), is that the Lehman fraud began in the late 1990s. It began well before any price bubble had occurred in housing and long before subprime mortgages were consequential in number. Thus if one were aware of that problem, one would have looked more and more askance at the boom of the 2000s.
What early warning for the next bust do we have?
The obvious culprit is cascading Federal debt and other promises as the U. S. morphs more and more into a command and control economy. The Federal assumption of Fannie and Freddie liabilities and the general increase in the stated deficit is now done with absolutely no pretense that this debt will ever be paid down. The question is rollover capability.
This is not promising, as the Obama administration continues to go very short term in debt issuance.
There is no way to know what inflation and deflation outcomes there will be, however, but if one invested in Argentine debt during upturns in the economy, one still ended up with an unserious borrower. The same goes for Greece.
If Argentina can survive and issue more debt while stiffing its creditors and ruining its savers with massive devaluation(s), why would a far more powerful country such as the U. S. not ultimately take those same actions?
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