If real reform doesn’t happen, get ready for a fearsome certainty: that markets will eventually correct our unsustainable financial system. They have tried to do so several times over the decades by punishing firms like Continental, Long-Term, and, most recently, Citigroup, as well as the lenders who financed them. The government thwarted these necessary corrections at every turn, bailing out the reckless and their enablers. But the price of maintaining our untenable system keeps growing, and eventually the government won’t be able to pay the bill. The multitrillion-dollar price tag attached to the government’s current endeavors already endangers the nation’s fiscal health. A decade from now, failing financial firms could take the credit of the U.S. government right down with them.
Read all of this article. The Obama Administration loves to pin the blame of its large deficits and other problems on its immediate predecessor. But that doesn’t solve the problem. The current occupant of 1600 Pennsylvania Avenue, radical though he is, may find himself in the same boat as Louis XVI: facing state bankruptcy. (I’m not convinced that process will take a decade.) Louis’ predecessor said, “After me, the deluge.” It doesn’t matter if the flood breaks on your political enemy or your own grandson, it breaks.