One big lesson from the last week and the pending bailout bill on Congress, is that America runs on credit.  As politicians on both sides continue to say, “Credit Markets have frozen up.”  I think a bigger take away from the recent events is not that housing prices have dropped or their is a subprime problem.  Instead, it is that the country goes no where without credit.  Think about that.

The entire economy runs on borrowed money!

Whatever happened to saving money to buy things.  I know — it seems like a joke.   America has no savings at all.  Nearly everybody uses credit to buy not just cars and houses but everything.  As an American the most important score is your credit score.  As your credit score declines you have a more difficult time, perhaps impossible, functioning in society.

As people lose jobs, they cannot pay their bills.  Their credit scores plummet.  That are functionally homeless and many will become literally homeless.  There are six million foreclosures in the pipeline and don’t believe that all of these foreclosures are because of predatory lending.  Some people just lost their jobs.

Just as individuals use credit to pay even their most mundane bills, so does the Federal Government which is now looking at a $11.3 TRILLION national debt.   This amounts to over $130,000 for each family in America.  Many of these families that are reference don’t own houses, have no college education, and are marginally employable.

Maybe this bailout will unfreeze the credit markets — maybe not.  In any case, there are plenty of other shoes to fall.  Hedge funds are going to start failing.  People with any money are going to stop buying and borrowing.   Companies earnnigs will continue to fall.  The stock market is going to tank even though it might rally some in the days that follow the bailout.

Convinced yet?

America is doomed.