Prime slips…and slides into subprime.
Problems in subprime mortgage loans could be spreading into subprime auto loans…and subprime commercial loans.
In subprime auto and truck loans alone, there is some USD$34 billion outstanding. As to the rest of the loans that were made to shaky borrowers, without proper credit standards, the total may reach into the hundreds of billions.
And what about politics? Isn’t the U.S. government operating at subprime levels? And aren’t the candidates for next year’s presidential election also less than prime?
Oh where…oh where…dear reader…shall we begin?
No big breaks in the financial markets yesterday. But the millwheels keep grinding – turning the pretensions of the smart…the conceits of the powerful…the assets of the rich – all to dust.
When standards go out the window, they just don’t go out of windows in trailer parks and ghettos. They go out of windows in gated communities in Florida and Washington. And they would go out of windows of skyscrapers in Manhattan and London, if you could only open the windows.
Even in education and art…standards slip.
We were looking at Henry’s report card last night. Ai yi yi…
“Needs to work harder…” said his science teacher.
“Performing below his capacity…” said his maths teacher.
“Work okay…but could be much better…” said his Latin teacher.
The half-empty part of that glass was obvious. But there was a half-full part too.
Henry does his homework until midnight every night…and works on it at least 8 hours each weekend. And still, his teachers aren’t satisfied.
We checked his grades and class ranking (in France, every student knows exactly where he stands) and found that Henry is above the average in what must be one of the toughest schools in France. Ah ha! A school with STANDARDS.
From what we’ve heard, in most of the schools in France – and America – students get passing grades, even without really knowing anything.
Meanwhile, yesterday, Elizabeth came back from an exhibit of Greek statues…attributed to Praxiteles or his imitators.
“It was unbelievable,” she remarked. “The sculptures had such dignity. It is incredible that they were done more than 2,000 years ago.”
A thought crossed our mind. How many of today’s artists could create a beautiful statue out of a block of marble?
But blocks of marble are not our beat here at the Daily Reckoning, so let us get back to money.
What is endangering America’s money is the same thing that is undermining its position in the world – slipping standards.
And slipping standards is what had brought about the fifth of our Big E’s.
We began to review our Four Big E trends the other day: Energy, Experimental Money (the faith-backed dollar), and the Exodus of power and wealth from West to East. Today, we look at our fourth – the Empire.
When we say that America is an Empire, it is neither a matter of desire or reproach. It is simply an observation.
Some readers think it is unpatriotic or un-American to notice. But while a good husband doesn’t notice when his wife gets fat, perhaps, a citizen with his wits about him might do well to keep a close eye on his government. And if he looks carefully at America circa 2007 he will see that it more closely resembles an empire than a modest republic.
Its troops…its culture…and its commerce…impose themselves over almost the entire planet.
Empires must be empires and follow the imperial path…from humbug, to farce, to disaster. They must believe what isn’t true (that they have some intrinsic, inalienable advantage)…and they must relax their standards…as they stretch…and then overstretch…until they have stretched too far.
The Daily Reckoning Australia