Who will bail out America? A longtime budget hawk and currently CEO of the Peter G. Peterson Foundation, David Walker (left) says America's growing long-term debt is dangerously close to passing a "tipping point" that could trigger soaring interest rates and a plummeting dollar. In a worst case scenario, that could trigger a "global depression," he says, warning: "Nobody's going to bail out America." With the U.S. facing $50 trillion in unfunded liabilities and around $62 trillion in total long-term debt, what worries Walker most is what happens after the recession dissipates, as detailed here. "I'm less concerned with the short-term deficits than I am the fact that we're not doing anything about those structural deficits that people used to call long-term," says Walker, former U.S. Comptroller General and head of the Government Accountability Office. "But the long-term is here." – Yahoo Finance

Dominant Social Theme: Tackle the tough choices.

Free-Market Analysis: Peter Peterson has been sounding these warnings for decades, and now his CEO has taken up the gauntlet. We suppose fiscal conservatism is a laudable goal, so we shouldn't complain too much. But strange as it sounds, we don't believe either Peterson, nor Walker go far enough. For Peterson, of course, the fiat money economy needs to be radically adjusted so that America can remain solvent. However, it never seems to occur to him, or those around him, that the current fiat money/central bank/fractional reserve system is itself the problem. Here's some more from the article:

What's ultimately at stake may be nothing short of Americans' faith in government and our standard of living. "There is a way forward. There is hope," Walker says. "But we need to actually make some tough choices." Walker, author of a new book, "Comeback America," argues the U.S. needs to tackle four key issues if the nation wants to recover: Impose tough budget limits; Reform Social Security; Cut health-care costs; Reform the U.S. tax system.

We're old enough, as a combined editorial entity, to remember The Flood, and thus we're aware things don't always work out the way you want them to. Anyway, these goals have been kicked around for decades. And now that the United States has embarked on a course of nationalized health care, we wonder where exactly all this fiscal discipline and commensurate costs savings are going to come from. Not only that, America's financial situation and the world's, remain precarious, which means there's even less fiscal room for America to maneuver to face the challenges that Walker identifies.

As a matter of fact, coincidentally, throughout this week and last, we've been sounding the alarm about the phony "recovery" worldwide that the Western mainstream media has begun to proclaim. Given the optimism with which such articles were approaching the Greek "bailout" (nonexistent), the US "recovery" (questionable, at best) and the supposed renewed fiscal discipline of governments worldwide (a contradiction in terms), we were beginning to feel like a child pointing out the emperor has no clothes. Recently we stumbled on an article that provided us with the knowledge of some kindred spirits – not that it's necessarily company we wish to keep. Here's an excerpt:

ECB Official: World on Edge of Double Dip Recession … The world economy could fall back into recession, says European Central Bank Governing Council Member Nout Wellink, who also heads the Dutch central bank. "Domestic dynamics leave much to be desired, especially in Japan and most European countries, where private consumption and investments are declining or stagnating," he wrote in the bank's annual report. "This poses the risk that the economic recovery makes a false start and will be W- shaped," the report said, according to Bloomberg. In both Europe and the United States, production is coming back and financial markets are rising. But consumer spending lags. And that's leaving unemployment at high levels – 9.7 percent in the United States.

In addition, government debt is mushrooming in the United States, Europe and Japan. "Notwithstanding the return of a certain euphoria on the stock exchanges, most risks are still downward," Wellink wrote. … "The very loose monetary policies at the moment sow the seeds for new instabilities." … Low interest rates are pushing investors to emerging markets, which will force asset prices higher there, he says. Star economist Nouriel Roubini also says another recession may be in store for the U.S. "A slew of poor economic data over the past two weeks suggests that the U.S. economy is headed for – at best – a U-shaped recovery," he wrote in a report. – Moneynews

We've also written on numerous occasions that China is in the midst of a classic paper-money bubble. Now it has been pointed out to us in pained emails that the industrial base of China is solid and the demand of one billion-plus citizens is virtually limitless. But Africa is probably a place with unlimited demand as well. So maybe it's not all about fulfilling demand. No, what countries need are stable, private, money systems, and that's exactly what China doesn't have, in our opinion. China's culture is intensely entrepreneurial at the lower end, but at the upper end it increasingly seems as stratified and controlled as the USSR in its heyday.

We're told China can't have a classic consumer bubble because China sterilizes the money and doesn't leave a lot in the hands of citizens but recycles it. We're told that foreign capital provides most of the seed money for industry in China. But, being of the Austrian, free-market economic persuasion, we happen to know that when you have a paper-money, command-and-control economy there is no way in heck that the money supply won't expand beyond the scope of what the real economy can prudently use. And that means, ultimately, price inflation. And that is exactly what China's got. Recently we stumbled across an article that makes this rather well we thought. Here's an excerpt:

Stockpicker warns of China bubble … SVM's Colin McLean has warned that China could be the next stock market bubble. The managing director of SVM Asset Management said Chinese infrastructure spend looks similar to the early stages of the US subprime crisis, meaning investors should pay careful attention to any news relating to banking losses from land speculation. "With fresh memories of the recent banking crash, few investors are giving much thought to the risk of a bubble. This could come sooner than expected and China seems the likely source," Mr. McLean said. "Its recent rapid growth looks unsustainable and some of the lending practices in China should trigger alarm bells." Mr. McLean pointed out much of China's spending on infrastructure has been financed through special local government fund vehicles, which have found it easy to borrow while interest rates are low. "Some of the biggest cities in China have taken on enormous debt that is risky despite China's high growth rate,' he said. … "The overall picture looks much like the early stages of the US subprime credit bubble." He added that any slowdown will have adverse implications for the global economy. "Although China's economy is much smaller than the US or Europe, it has played a crucial role in the global recovery of the past 12 months." – UK Telegraph

Now all the above may make for some grim reading, but we've saved the best (or worst) for last. We've always had a sneaking suspicion that the point made by free-market thinker and libertarian congressman Ron Paul (R-Tex) was a correct one – that the powers-that-be were quite aware of what mercantilist fiat-money central banking does to an economy. How it twists whatever economy it is applied to like a pretzel and then drains it of wealth. In other words, the kind of global implosion we're seeing now was bound to happen, and the power elite knew it would.

Regulatory measures can reinforce the drift toward authoritarian centralism – and they have in both the EU and America. We've already written about how health-care and upcoming "immigration reform" legislation may add a great deal of pressure to moves to legalize the 50 million Hispanic workers in the United States illegally. This would reinvigorate the Democratic/socialist party in power and pave the way for a defacto merger with Mexico (to be followed presumably with one with Canada).

But one thing we thought we were confident of, however, was that the Trans-Texas Corridor – which was supposed to run from Canada to Mexico and slice the United States in two like a cabbage – was dead, vanquished in Texas and elsewhere, a victim of its own bad publicity. How surprised, then, we were to read the following (excerpted from a larger article) on the website from our old friends over at the August Review. Here's how it begins:

[August Review Editor's note: The Free Trade corridor network that tie Mexico, Canada and the U.S. together are a critical component of the North American Free Trade Agreement (NAFTA) that was negotiated by George W. Bush and signed into law by Bill Clinton. Both Bush and Clinton were members of the Trilateral Commission. Furthermore, NAFTA's chief architect was U.S. Trade Representative Carla Hills, also a Trilateral. The Trans Texas Corridor is the first major link of this super-corridor system; if successfully completed (e.g., if Texans lose the fight to stop it again), America will be opened up like a can of sardines.]

After [Texas Governor] Rick Perry's highway department announced the Trans Texas Corridor (TTC) route known as TTC-35 was "dead" in 2009, we find out post-election in 2010 that it, along with free trade, is very much alive and well. Canadian officials have shown renewed interest in a multi-modal trade corridor along I-35. Winnipeg recently announced its intention to build an inland port similar to those in San Antonio and Dallas. One such inland port in Kansas City has ceded sovereign United States territory to Canada and Mexico with the flags of all three countries flying over it. Officials in Winnipeg said it also intends to run a logistics and trade corridor to include rail and high speed highways all the way to Mexico as an Asia-Pacific gateway connecting to Toronto and Montreal.

It should surprise no one that former San Antonio Mayor Phil Hardberger and tolling authority (Alamo RMA) Chairman Bill Thornton took a trip to Toronto in 2006, partially at taxpayer expense, to promote Trans Texas Corridor-style trade connections and to be certain it includes the Port of San Antonio. Norris Pettis, Canadian Consul General in Dallas, notes in the latest San Antonio Business Journal that "of all the urban centers I deal with, San Antonio is right up there in preaching free trade." The article also said Canadian officials observe an anti-trade sentiment in the U.S. as a whole, but see an open door in Texas, which they say doesn't share "protectionist policies."

So it turns out it is full speed ahead for the Trans-Texas Corridor! You know, it's kind of incredible. We can hardly keep track of the pressure being applied to the poor, bleeding union of "these united States" – and to Mexico as well. We've pointed out the seemingly deliberate drug war that is destabilizing Mexico, and how the health care bill will likely add pressure to the debate to legalize illegal immigrants. We've tried to indicate that an immigration bill itself, were it to be considered by Congress, would add additional pressure to pursue a de-factor merger. But the continued pursuit of the Trans-Texas Corridor is the "smoking gun" in our opinion.

These people just don't stop. They haven't missed a beat. The rage in America over the Bush/McCain inspired "immigration reform" was palpable, and you would have thought that would have halted it for at least a decade or more. Instead, it merely seems to have driven the planning further underground. But the pincer continues to close from all angles and astonishing as it seems, those who plan these sorts of escapades (including the EU, etc.) seem determined to move ahead with a merger of America, Mexico and the Canada.

It would certainly be paranoid of us to propose that the current, apparent, worldwide unraveling (which seems to be continuing) was a predictable result of an unstable global financial (central banking/fiat money) system and that the people in charge knew darn well what they were doing. Even more paranoid would be the suggestion that such a collapse was engineered to bring globalization a good deal closer – by giving the power elite the opportunity to harmonize financial regulations worldwide as a result (maybe the reason the G7 expanded to G20, etc.).

Since we realize this sounds paranoid and horrible (and since we care deeply what people think of us), we don't suggest it – we withdraw even the thought. It is all coincidence, we agree. It could not be anything else. Nobody could wield such power, or work with such devious meticulousness.

And yet … this 20-lane high/railroad/bus-way would split America open like a piñata (to use an appropriate term). After it is constructed, the country will never be the same. One could make the argument that the Trans-Texas Corridor will do to 21st century America what the Civil War did to 18th century America. The nation will change in fundamental ways. Actually it will bifurcate – which would make a Mexican merger even easier.

America doesn't need the stiff medicine of Pete Peterson's plan. What the country probably should do is repudiate at least some its debts, dissolve the Federal Reserve and go back to a free-banking gold-and-silver standard. That would be enough to solve many of the problems the country faces. (Other countries should do the same.) Unfortunately, it seems the US is moving in the opposite direction, toward incredible sociopolitical complexity of super-regional government and yet another fiat currency – the mythical amero.

It's not a done deal, of course. What may halt this relentless drive toward super-regionality is the growing tide of American (and Canadian) anger – given that both of these countries have a good tradition of self-rule and individualism and a high literacy rate that has allowed the Internet to penetrate a significant spectrum of the population. It is the Internet that is sounding the alarm about all this, and exposing these secret plans. If people want to live in expansive currency ghettos, that's their right. But they shouldn't be manipulated into doing so.