All debts contracted

At 7:45 am EDT (1145 GMT) Dubya will give yet another address on the economic crisis and yesterday's failed vote on the bailout in the House of Representatives.

Hard to believe this guy and how far things have fallen for him. Four years ago, Bush pulled off a narrow win over John Kerry. The President, having finally gotten a win that could be seen as clean by most and moreover the first majority win since 1988, claimed he had gained "political capital." He certainly burned it quickly not only by continuing a deeply unpopular war but by bungling the federal response to the Katrina hurricane.

And the worst part was that he, with Congress' acquiescence, plunged the US deeper and deeper into debt. Rather than trying for a balanced budget, annual deficits were run on purpose. While Clinton set the US on a path to pay off the debt in only 10 years, Bush not only wiped out Clinton's efforts but essentially doubled the debt.

There are a whole bunch of reasons why America is in the mess it's in right now -- subprime mortgages, the war, no restraints on "golden parachutes." But imagine if America had actually balanced its budget. Would an emergency $700 billion bailout have then been more palatable? Sure, because there would at least be the perception that it could be paid back.

Not so much now, with the debt ceiling scheduled to go up to $11 trillion when some version is finally passed. The US Constitution may be the supreme law in the US but it is also not self-enforcing, and the least of these is the first clause of Article VI which requires the US to live up to its debts.

I never thought I'd live to see the day when the IMF and / or the World Bank might actually have to give the US a loan to avoid going bankrupt, as they did in the mid 1970s with the UK which in part contributed to the fall of Callaghan and the rise of Thatcher. But it could be that day is almost here.

If the winner on November 4 winds up being Obama, expect an almost seige mentality for at least the first two years and forget anything he may have said about the audacity of hope. So far, the bank for the Eurozone and eight other countries including Canada have had to coordinate with the Federal Reserve to stop a meltdown as I wrote about yesterday.

Now imagine the humiliation when Mainland China, Russia and Saudi Arabia start dictating the terms of a loan. Most likely, the US will have to give up its long standing veto within the banks of last resort.

As BTO used to sing, "You ain't seen nothing yet!"

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