March 9, 2010

America, the fragile empire - latimes.com

America, the fragile empire - latimes.com

A friend sent this link. I urge you to read the LA Times story carefully and if you find a germ of probability in it, I also suggest you read "The Black Swan" by Nassim Taleb.

The implications of a destabilizing event suddenly triggering massive changes in hugely complex systems is real and usually negative. We see some of that in our present Great Recession.

We should recognize that America's prosperous future is by no means guaranteed, particularly as our country is spending money we do not have. This policy is creating ever more massive debt mostly owned by other countries who do not necessarily share our American vision for the future.


"...Neither interest rates at zero nor fiscal stimulus can achieve a sustainable recovery if people in the United States and abroad collectively decide, overnight, that such measures will ultimately lead to much higher inflation rates or outright default. Bond yields can shoot up if expectations change about future government solvency, intensifying an already bad fiscal crisis by driving up the cost of interest payments on new debt. Just ask Greece..."
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