Reply #6: There's a real possibility that the international banking system is about to bust

[Yo_Mama]

Europe just rolled over last week. The situation is extremely serious. China is telling its banks to get serious about their exposures, and only G_d knows what will happen there. The US has only two more years of trillion dollar deficits left, and then we won't be able to run deficits either.

Spain and Italy are both on the chopping block now. That takes the situation well past the point at which there is enough money in Europe to bail out the European banks, so they will have to find another solution - more likely none, and a very severe recession with banks keeling over and dying for years to come will take hold in Europe.

The problem in Spain's banks is acute, and it's a large part of the reason for Spain's 20% + unemployment. When banking systems crash and lending has to massively shrink, the inevitable result is very high unemployment.

If you are prepared to tolerate 15% + unemployment in the US, then you can afford to let the banking system crash. If you aren't prepared to tolerate that, then you will bail out the best 75% of it, socialize the cost, and impose a two-decade regime of austerity to survive.

In the end, it's the average dude or dudette who always pays the freight.