Scary History Lesson

July/30/2008 1:11AM
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Looking back on the last four world powers, the Roman Empire, Spain, the Dutch, and the British Empire, there are two things each had in common as they unraveled. First, they developed imperial ambitions. They wanted to give the world the benefit of their political model and wisdom. Second, they became engrossed with finance. Not a distant third, new energy ideas arose to displace their sources.

Does any of this seem familiar? We are entrenched in Iraq and Afghanistan and sabre rattling at Iran. Billions of dollars are going to these efforts. Second, we have grown the financial sector to over 22% of the GDP. It’s the main factor in our economy today. Last, we are out of oil and don’t have a plan.

We have a house of cards. If the wrong card gets pulled, it all falls down. Despite all the money we have given away around the world to buy friends, we have few. Messing with the dollar is now an international sport. Grabbing oil on long -term contracts is common practice. This is oil that might have been available to us on the open market. 

If the big players in the oil game decided one day to unhitch the oil price from the dollar, it might be the move that brings the pile down. If the dollar goes into free fall, it would be a total disaster. 

Our infrastructure is falling down. Our key industries are in trouble—airlines, automotive, trucking, banking, retail, investments, just to name a few. We can only print so much cash. The way we’ve been printing it the press may be wearing out.

Most of us, including me, blame the government for all of this. They do have more than their share coming. But, the financial mess that may ignite the fire is greed based. The Fed and the Congress turned on the green light. There was no traffic cop. But, all the financial institutions in America hit the gas and took the risks. They deserve the red ink they are getting. In itself, it might be fixable. But, combine it with the energy mess, and it portends massive problems. 

This country has survived a lot of crises. This one may test us more than any we have defeated. Strap it on, this is not going away soon. Nor is the Black Knight or the White Knight going to fix it fast. Neither could write this article. Both are clueless about the magnitude of the mess they will inherit.

This might explain the why no qualified candidate is running. Anyone qualified knows better.

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