What is occurring now has nothing to do with bailouts

No More Bailouts	smokey	NEW 8/25/2007 10:50:57 PM
What is occurring now has nothing to do with bailouts. Bailoutscan only happen when the credit in the system is sufficient to overcomethe domino effect of the contagion created by cascading defaults. Fordecades the credit in the system has been composed of fiat currencieswhich are nothing but "promises-to-pay". That is -- the credit in thesystem has been supported by debt. Ultimately the participantsgrow weary and wary of the accumulation of more debt. At a certainunpredictable point the perception of debt simply overcomes theperception of credit. It is then that any attempts to bail out thesystem with more credit/debt is like pushing on the tow-rope to try toget your Jeep out of the creek bed. Promises-to-pay wereoriginally designed and used to inflate economies out of deepdepressions. Once the economy was upright, the promises-to-pay werepaid and the growing economy then regulated the creation ofpromises-to-pay. But, because of the political perception of theneed for media-induced popularity, the utilization of promises-to-payhave been used even in the good times. This abuse of credit has createda huge financial casino the fantastic atmosphere of which has numbedall to the fact that the credit side of the equation has disappeared.The house can only exchange plastic chips for plastic chips. The vaultsare empty. There is no more credit in the system with which tobail out anybody. Everyone is holding promises-to-pay. Even theperceived creditors are holding non-sovereign fiat currencies. Thesepromises-to-pay can be broken at any time. 1971: "Sorry, France. We can only give you more dollars for your dollars.. no more gold. Good luck" c2008: "Sorry, China. We can't give you anything for your dollars, euros, yen. Good luck." Regardless of what we have experienced in the last decade, at a certain point debt can no longer bail out debt. When that occurs, promises-to-pay return from whence they came... Thin air.