Russia and Europe Leading the Way Down

The financial problems of US financial markets and institutions has been front page news for several weeks. The more severe problems of the European and emerging nations' (BRIC) financials are coming to light far more discretely. And it looks as if Europe and the emerging markets are in even more trouble than the US, unless Obama is elected (in which case the US will have the worst of it by far).

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

...Amazingly, Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn) to what was once the US backyard. Hence the growing doubts about the health of Spain’s financial system – already under stress from its own property crash – as Argentina spirals towards another default, and Brazil’s currency, bonds and stocks all go into freefall.

Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.

The region has borrowed $1.6 trillion in dollars, euros, and Swiss francs. A few dare-devil homeowners in Hungary and Latvia took out mortgages in Japanese yen. They have just suffered a 40pc rise in their debt since July. Nobody warned them what happens when the Japanese carry trade goes into brutal reverse, as it does when the cycle turns. _Telegraph

As these cascading failures make their way through interlocking global financial institutions, national leaders who only a few weeks ago were taunting the US for its financial troubles will have to face some extremely difficult decisions close to home.

I fear that what we will see are ever more meddlesome initiatives both in the United States and, especially, in Europe. Already we have witnessed tax-and-spend politicians seize upon the credit crisis to propose measures that would take the “private” out of “private property” and would deliver ever more aspects of the the economy into the governments hands, aiding and abetting their increasingly ambitious efforts to “spread the wealth around.” I shudder to think what embracing such policies would portend for prosperity and freedom. _PJM

If US voters choose Obama, the US will be taken out of play as the traditional powerhouse of the global economy. Obama's revolutionary cadre will not be able to help themselves. Like the scorpion crossing the river on the turtle's back who cannot keep himself from stinging the turtle in mid-stream, Obama's revolutionaries cannot help but attack the taxpayers and businesses with suffocating regulations and taxes. They know no other way. If voters elect them without understanding their nature, whose fault is that?

The US rescued Europe in WWI, WWII, and in the cold war. Europe has been depending upon the US defense umbrella to prevent significant wars in Europe since 1945. Europe has depended upon the US domestic markets for export income and on a steady flow of new scientific and technological discoveries from North America, Japan, and joint efforts between the three. With a significant and sustained dip in business and R&D activity in the US due to redistributive burdens and costly and counterproductive environmental regulations, the world economy will have to sort out the chaos on its own, for the most part.

Such chaos often leads to war, and without a strong US military committed to maintaining order, significant re-ordering of the world powers with concomitant huge loss of life and destruction of infrastructure is not unlikely.

As the ancient Chinese curse states: "May you live in interesting times." It appears that the US voter-- led by the US news and popular media and pseudo-intelligentsia-- means to invoke exactly that curse upon the world.

For more ideas of what an Obamanation would mean, read this and this. It is not as hard to understand the underpinnings of the Obama-lution if one is aware of the intent undermining of education in the US dating from the 1960s, from K12 through university. If Obama had not come along, someone else would have in a few years. But Obama's timing has been immaculate, ever since he entered politics.

America will suffer a hangover, of sorts, soon after the election. A "buyer's remorse", if you will. But that will be nothing compared with the impact of Obama's policies on the nation, its economy, its traditional sense of optimism and self-reliance, and ultimately its ability to create a good life for its people. The detrimental effects of Obama on all of those national traits cannot be overstated. Obama has had a wild ride upward. I wonder how he will handle the subsequent and inevitable descent?