Morning Head (Start)

Shalom readers, consider this your prelude to a Crap. Today Obama is still in the United States of Military Contractors on a world tour that should poll extra well with the undecideds since nine US soldiers were killed there last week. Of course, his trip is mostly a big photo-op during which nothing really important besides the requisite "Important people meet on gigantic chairs placed so far away from one another they should ha ha name them Undignitaries" is going to happen, and the really important news is that communities are banding together to save their Starbuckses. Please also note the um cojones it takes to adequately represent the legal interests of 16 Yemenis at Gitmo, as David Remes is doing in the picture. Finally, click for the best 300 words we read this morning, on how the American economy is sort of like an obese drunk gambler on multitrillion dollar tilt to whom the Asians can't stop lending money because they just like playing with him too much.

In the global economy of the moment, the United States itself is too big to fail.

The logic for that assurance goes like this:

The American consumer has for decades served as the engine of world commerce, using borrowed cash to snap up the accoutrements of modern living - clothes and computers and cars now manufactured, in whole or in part, in factories from Asia to Latin America. Eliminate the American wherewithal to shop, and the pain would ripple out to multiple shores.

Globalization, in other words, allowed China and Japan to amass the fortunes they have been lending to the United States.

But globalization also emboldened American capitalists to take huge risks they might have otherwise avoided - like borrowing to erect forests of unsold homes from California to Florida, delivering the speculative disaster of the day. They were operating with bedrock confidence that money would never run out. Someone would always buy American debt, delivering more cash for the next go.

And this same interconnectedness appears to have reassured regulators in Washington about the health of the American financial system, as they declined to intervene against highly speculative lending during the real estate boom. Mortgages were being distributed to investors around the globe, and so were the risks, the regulators reasoned. Anyone who bought into that risk would have a strong interest in seeing that the American financial system stayed upright.

In other words, in the estimation of people in control of money, the United States cannot be allowed to collapse, just as Fannie and Freddie cannot be allowed to fail. Too much is riding on their survival.