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August 12, 2011

Blogging After America Day One
Prologue - The Stupidity of Broke [ArthurK]

Welcome to the first installment of Blogging After America. Each day I'll (ArthurK aka Comrade Arthur ) will read a chapter, summarize Steyn and share my observations with you. I'm not commenting on everything - just things here and there that catch my eye. Share your despair in the comments.

Other cobloggers might pop in with their opinions.

"Musings" are my analysis, not Steyns.

Why not pick up a copy and follow along?

---------

After America is Mark Steyn's more-or-less sequel to America Alone. The situation in American has gotten worse much faster than expected in 2006. That's what After America looks at.



After America isn't a forecast but a warning. It's saying this is what could happen if things go on without being fixed. But fixing won't be easy - is it even likely?

I wrote After America, because I don’t want it to come true. I’ll be very sad if it comes true. When I wrote about Europe in America Alone, everything that has happened in the five years since has confirmed my thesis, even thought the smart guys of the Economist said my book was alarmist. I think if anything, it was insufficiently alarmist. I don’t want this, the vision of a post-American world, to come true. But to do that, Americans have to understand that when Obama stands up today and talks about long term problems, no. It’s not about... you can’t sit around and form another commission that you’re going to ignore, and talk about your long term problems. We’ve got to fix the short term problems, or we’re not going to be around long enough to get clobbered by the long term problems.

Here's Chapter Zero or the Prologue.

Page 1. Europe is still failing as predicted in America Alone, but the American decline has sped up much faster than expected.

P3. "If something cannot go on forever, it will stop." You don't have to figure out how to stop it. It'll stop all by itself. Of course, you may not like the way the auto stop shakes out. The rate of spending increase is unsustainable? Then it won't be sustained! It's not a lack of will power that will stop it, its mathematics.

P5. By 2020 interest payments on the national debt will be greater than the Defense budget! (that's with optimistic interest rate assumptions) "... from a nation of Aircraft Carriers to Debt Carriers."

P8. From the mid 1960s to 2009 spending rose at an unsustainable rate. Didn't really matter which party controlled Washington. But from 2009 to today... Holy Smokes!

Musings - The current debt situation reminds me of the geopolitical problem after 1974.

1974 - Watergate led to Dems winning big time in Nov elections. In 1975 Dem controlled Congress refused to supply South Vietnam and North Vietnam won the war. This led to the Soviets thinking, for the first time in the Cold War, "Hey, we can actually win this thing!". After South Vietnam fell the Soviets got much more aggressive (Nicaragua, Angola, Afghanistan) and things looked bleak. We had to work really hard to fix things afterwards.

2008 - Housing Bubble collapses. Financial Crisis. Great Recession starts. Dems win big time in Nov elections. In 2009 the perceived mandate leads to Turbo-Spending - the Spendulous, the Stimulus. This leads to a situation where we could facing financial catastrophe before we are psychologically and politically ready to deal with it. Pre 2009 the rate of spending was too high but there was a belief, warranted or not, that we could deal with the problem as it slowly approached. But the problem is here right now and we do not have the right leadership in place to handle it.

It's easy to say, "It's Obama's fault". But all the economic doom headed our way would have happened anyway - he just greased the slide. We were already sliding! If you're living in a flimsy, decaying building you're dismayed when, unexpectedly, an earthquake hits. But the building was doomed anyway if you didn't fix it. Now you have the exciting prospect of shoring up the building during the earthquake!

P10. Pre 2009 foreign holdings of American debt were less than 5% of world GDP. In 2009 it was 7%. By 2020 it's estimated to be 19%. That's Not Gonna Happen.. The rest of the world isn't going to put 19% of it's income into American debt. Therefore, the crunch will happen before 2020.

Musings - Why are people buying American debt now? I suppose on the Greater Fool principle. The buyers think they can find a greater fool to buy the debt from them before it's too late. We saw how well that plan worked with toxic CDOs in 2007-08.

P12. When Big Empires fall, they fall Fast! The population of Rome fell 75% in the 50 years before it was sacked.

P13. America isn't facing decline. It's declining! The question is can we handle or prevent the fall.

P14. (best paragraph of the prologue)

When government spends on the scale Washington’s got used to, that’s not a spending issue, it’s a moral one. There’s nothing virtuous about "caring" "compassionate" "progressives" being caring and compassionate and progressive with money yet to be earned by generations yet to be born. That’s what "fiscal conservatives" often miss: This isn’t a green-eyeshade issue. Increasing dependency, disincentivizing self-reliance, absolving the citizenry from responsibility for their actions: The multitrillion-dollar debt catastrophe is not the problem but merely the symptom. It’s not just about balancing the books, but about balancing the most basic impulses of society. These are structural, and ultimately, moral questions. Credit depends on trust, and trust pre-supposes responsibility. So, if you have a credit boom in an age that has all but abolished personal responsibility, it’s not hard to figure how it’s going to end.

Musings - Steyn is saying it's not the spending, it's the attitude. True but if we're able to limit govt. it won't be able to spend money immorally. Simple (hah).

P18. Geopolitical implications. There are 3 major world civilizations. West, Muslim, China.
Muslims - (other than oil) economically weak, demographically strong.
China - economically strong, demographically weak.
West - weak on both.

Since the west built the modern world - what happens next?

P19. If economically strong countries like Norway or New Zealand have militaries too weak to defend themselves against a nuclear Iran or Sudan(!!!!) - holy crap.

P22-23. The economic problems in England, France and Greece are leading to riots. But in America, it's led to the Tea Party! American Exceptionalism = Hope.

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posted by Open Blogger at 05:06 PM

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