Friday, April 16, 2010

 

THAT VOODOO YOU DO?

It is probably true that our modern civilization has damaged the planet's ecology beyond repair. The cloud of Volcanic ash and vapour currently drifting over Europe and the Mediterranean countries though shows that when nature fights back...it holds the winning hand.

As the score is tallied from the 2008-2009 global recession; economists, commentators and bankers are being kind in their analysis of Canada's weathering of the downturn, and our prospects for a full recovery. A story I read this week described the Canadian recession as, in fact, pretty mild. The quick turnaround in business indicators including the "loonie's" dramatic rise on the money markets seem to bear that out.

South of the border, in the United-States, the situation is dramatically different. Regulars on my FaceBook Wall read earlier this week my comments about the favorite part of the more than 100 times I have driven between Ottawa and Florida. - The historic and wealthy Shenandoah Valley of northern Virginia where many of Washington D.C.'s elite and wealthy have their homes (estates, really).- As it was on Tuesday - With the Lilacs, Apple Blossoms, Vineyards in full bloom; and the Polo Ponies out to pasture, the serenity of the scenery can be quite deceiving.

The earth shattering fall-out from the collapse of the world's economy could well trump "Mother Nature's" fury in changing the planet we all call home. The red ink flowing out of America's economic tap to the tune of billions of dollars per day, may lead to tectonic shifts of dramatic proportions on a world-wide scale.

The United-States of America owes too much money and it has set itself on a collision course with its principal banker: China. There are few historical precedents from which to draw (if any), for two such totally divergent countries; with incompatible social, political and economic systems; coupled with uncompromising world views and attitudes, to be so inter-dependant on one another. For a time, U.S. consumerism may still fuel the world's economic engine. The sad reality is that it will be crushed eventually by its heavy debt load.

How soon? The national budget now inching its way for approval from President Obama's desk towards Congress paints a truly dismal picture. America's debt is $12.8 Trillion. In this fiscal year alone; it's projected to grow by another $1.5 Trillion. To put that into perspective: In Bill Clinton's first full year as President (1995) the entire budget of the United-States was the amount of this year's shortfall - $1.5 Trillion. In fact, the American government has spent more than it has raised since 1970...except for a four year period at the end of the Clinton Administration.

So, how soon? To the degree that it does not depend on China calling-in it's debt; the tipping point appears to be in about 10 to 12 years. The Obama Administration's own projections indicate America's debt in 2020 will be just short of the country's entire economy - Roughly $21-Trillion. At modest interest rates, the annual cost of servicing that debt will be near $1-Trillion.

The exceptionally unpopular things that need to be done to wrestle down America's monster in the closet may mean that economic turbulence and turmoil on an Apocalyptic scale are just around the next corner.

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