I realize this blog is off to a slow start.
Part of it is: the United States is still far away from this titular “zero hour” as I call it, where governments can no longer sell treasury bonds. The U.S. is years away, but some countries like Iceland and Greece are there. Even with bailouts from the Eurozone, Greece is still there, and Iceland has no France and Germany it can rely on for help. State governments are heading there. For municipal and county governments, “zero hour” would be happening in many places, but for now public services they provide are shifted to higher levels of government. As long as a local government is under the umbrella of a larger solvent or credit worthy government, debt burdens seem to mostly be shifting higher up the totem pole, placing additional stress on the larger government.
Another part is: bailout activity has been slow in the news lately. Not that hundreds of billions aren’t pouring forth from the Fed and Treasury Department in support of wealthy banking interests, but reports on noteworthy details have been meager in the news lately.
So let me take a moment to explain why “zero hour” matters to me. I oppose the government rescue of our economy after the credit bubble popped. I believe the best solution is for the corporations that caused this mess to go bankrupt, and prices to fall as they naturally would in a free market, particularly for houses and other investment classes. I am opposed to government attempts to maintain house prices and credit-based assets above the market price, as it is doing now, and believe that it only delays the solution to the current economic downturn, which is lower prices.
When it comes to spending tax money, our government is showing little self-restraint. Worse, politicians are not only spending tax money they actually have, but are borrowing it from future taxpayers to benefit politically-invested interests today.
This government practice will stop when one of two things happen: either (1) a democratic majority agrees with me and start voting in politicians who will seek to stop bailouts and otherwise support responsible and sustainable government spending, or (2) the government runs out of money. The U.S. government already spends more than it takes in with taxes by selling Treasury Bonds, so #2 will only happen when the government can no longer sell Treasury Bonds, or more precisely, when people no longer buy them.
This I see as an advantageous outcome because it brings society back to a point where it has to live within its means. Even if a large chunk of our tax dollars is wasted in the future to pay interest on misspent bailout money today, and maybe the government services we receive are only half what we are paying in taxes because of interest payments on the debt, I still feel a society with a less meddlesome and more economically restrained government is better than the mess that exists now.
So I think zero hour is a good thing and welcome it. What would be better though is to control spending before we reach that point.