$1 Trillion Fix: US Government goes Kamikaze
While US Treasury Secretary Henry 'Kamikaze' Paulson seeks Congress permission to spend a further $700 billion of taxpayer's money to chase after bad debts, Bloomberg reports that public borrowing will soon go over $1 trillion and that this will crush the US Dollar.
Treasury Secretary Henry Paulson's plan to end the rout in U.S. financial markets may derail the dollar's three-month rally as investors weigh the costs of the rescue.
The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates.
Bloomberg, 'Dollar May Get `Crushed' as Traders Weigh Up Bailout', 22/09/08
It's all complete madness and exposes a panicking government that has no idea what to do in the face of the impending collapse that many of us in the global blogging fraternity have been warning about for years now. And neither the US or UK governments appear to be looking at any longer term strategies than trying to bail out a rapidly-sinking Titanic showing us all how incapable and incompetent they and their so-called neoliberal 'free market' chums really are.
Meantime both Russia and China are beginning to talk of setting up an alternative, global monetary system. They will, no doubt, soon find allies in other parts of the world such as Venezuela and South America. The Russians and French have taken the first steps towards a pan-European security pact.
Congressman Ron Paul (R) has described 'Kamikaze' Paulson's move to be akin to giving a drug addict yet another fix. Here's his take on events: