With “Ignoring Reality Has a Price“, the NY Times attempts to analyze how bad of a hole we’re in. “All told, the Federal Reserve has pumped $800 billion into the financial system” and that doesn’t include buying short-term debt, nor does it include “any of the money the Treasury Department is laying out, like the $700 billion bailout fund or the $200 billion” to prop up Fannie Mae and Freddie Mac.
After 14 months of crisis, the federal government – meaning you and me – has put serious money on the line. As a point of comparison, the entire annual federal budget is about $3 trillion.
Just how are we going to pay for all this?
The short answer is that the budget problems the country seemed to have a year ago are now even worse. Next year’s deficit (relative to the economy’s size) will probably be the biggest since 1992, and maybe since 1983. Taxes will have to rise or government spending will have to fall, if not both. Trying to contain the mess created by a bubble no doubt costs serious money.
And it gets worse from there. I think we Americans are really going have to take a look at our defense spending on offensive war capacity and make serious cutbacks. Our failing economy no longer can support having the largest (by serveral factors) armed force in the world.
Four at Four continues with a federal judge ordering 17 men released from Guantanamo Bay, an update from Afghanistan, and news that we’ve stopped evolving and why that’s a good thing.