The route to bankruptcy for a country is no different than it is for a corporation.
First, underestimate revenue by a magnitude of ten. For 2009 the tax revenue for the cities, states, and United States will shrink by 25%. This is just the combination of more people not working, less income for those working, and less sales tax, capital gains tax, less profit from companies, and all other sources. Think GM or Circuit City. Maybe a trillion or so.
Next, overspend. Don’t cut expenses step them up. The President-elect is on record saying we can’t worry about the deficit in the next year or two, we have to get economy back up and running.
Third, spend the overspending on the wrong things. Bailing out GM and other political favors. Renewable energy that doesn’t work. Infrastructure and pork sent to the members of congress with the most clout.
Fourth, incur more debt with interest payments to finance the folly. Print more money and raise more taxes starting another cycle of less revenue.
Result, you are Argentina.
