The end of the American empire.

[Postman]

http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html?pagewanted=1&_r=1


For months Roubini has been arguing that the true cost of the housing crisis will not be a mere $300 billion — the amount allowed for by the housing legislation sponsored by Representative Barney Frank and Senator Christopher Dodd — but something between a trillion and a trillion and a half dollars. But most important, in Roubini’s opinion, is to realize that the problem is deeper than the housing crisis. “Reckless people have deluded themselves that this was a subprime crisis,” he told me. “But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts.” All of these forms of debt, he argues, suffer from some or all of the same traits that first surfaced in the housing market: shoddy underwriting, securitization, negligence on the part of the credit-rating agencies and lax government oversight. “We have a subprime financial system,” he said, “not a subprime mortgage market.”

Roubini argues that most of the losses from this bad debt have yet to be written off, and the toll from bad commercial real estate loans alone may help send hundreds of local banks into the arms of the Federal Deposit Insurance Corporation. “A good third of the regional banks won’t make it,” he predicted. In turn, these bailouts will add hundreds of billions of dollars to an already gargantuan federal debt, and someone, somewhere, is going to have to finance that debt, along with all the other debt accumulated by consumers and corporations. “Our biggest financiers are China, Russia and the gulf states,” Roubini noted. “These are rivals, not allies.”

The United States, Roubini went on, will likely muddle through the crisis but will emerge from it a different nation, with a different place in the world. “Once you run current-account deficits, you depend on the kindness of strangers,” he said, pausing to let out a resigned sigh. “This might be the beginning of the end of the American empire.”

[Tierra_y_Libertad]

1. Don't be silly. The bankers and politicians are going to fix it.

Otherwise known as "the fix is in".

[Neshanic]

2. This guy has been right since day one.

[RaleighNCDUer]

3. I think he's wrong.

I think it is the beginning of the end of the American Republic. This will be the catalyst that will cause the powers that be to abandon all pretenses and BEGIN the American Empire.

After Caesar's death, Rome looked like a fading power, coming off of years of civil war and a fractured economy. Then, Empire came along to save Rome and it became the pre-eminent power for 300 years.

We may well be witnessing the birth of a new, terrible, nation.

[Romulox]

4. Hallelujah! nt