This Daily Kos diary by gjohnsit is must-read material. The headline: "America is effectively bankrupt." The message: If we calculate our federal deficit honestly, using the same accounting methods recommended for corporations, our red ink comes down to a whopping $3.7 trillion dollars. That's ten times the amount Bush claims.

Even if the tax rate were 100%, we would not be able to pay what we owe. Printing money will thus become the only way to remove the debt monkey from our collective back. That means inflation. And -- although Williams won't make the point explicitly -- that also means fascism will probably come a-knocking at the door. Such is the lesson of history.

Bad news on unemployment, too. If we count all the severely discouraged workers (the lumpenproles, as Uncle Karl used to call 'em), the government's claimed 5.5% unemployment rate shoots up to 12.5%.

Are these assertions valid? gjohnsit draws his conclusions from the work of respected economist Walter J. "John" Williams. You can hear a good interview with him here. As the interviewer prefaces: "It's not for the faint of heart; strap yourselves in." John Williams' website is here; you'll also want to visit OpEd News.

In the afore-cited interview, we learn that the government has understated the GDP by some three percent -- meaning we are in a recession right now. But you already knew that, didn't you?

Other signs of economic ragnarok:

-- Iran is not the only Middle Eastern nation switching away from the dollar. Saudi Arabia and the UAE look ready to make the jump to the euro.

-- Federal Reserve Chairman Ben Bernanke (an expert in the causes of the Great Depression) has announced that the possibility of a future "disruptive correction" of the trade deficit "cannot be ruled out." When a Fed chairman says something like that, what he really means is "Watch out!" The trade gap will bite us in the ass, and the U.S. dollar -- which has been losing value slowly -- will soon plummet in value. And since oil may no longer be denominated in dollars, that fill-up will hurt your wallet a lot more than it does at present, because we will have to pay in more valuable euros. Higher trasportation costs means higher costs for...well, everything.

-- Isabel V. Sawhill and Alice M. Rivlin of the Brookings Institution announced darkly that

"...the federal budget deficits pose grave risks - a category 6 fiscal storm - to the U.S. economy. The current course is simply not sustainable. Promises to the elderly, especially about medical care, cannot be kept unless taxes are raised to levels that are unprecedented or other activities of the government are slashed. Postponing such action would be reckless and short-sighted. Massive amounts of capital have flowed in from around the world, financing much of America's federal deficit, as well as its international (or current account) deficit. While this inflow of foreign capital has kept investment in the American economy strong it means that Americans are accumulating obligations to service these debts and repay foreigners out of their future income. As a result, the future income available to Americans will be lower than it would have been without the government deficits.

The right-wing spin-meisters are preparing Americans for this by pretending that Bush brought about this problem through an over-abundance of "compassion" -- not through military misadventure and corruption.

-- The percentage of mortgage delinquencies keeps rising. The same dummies who kept voting for Bush also thought that adjustable rate mortgages were just ever so nifty-neato. Truth be told, one cannot easily feel sorry for people operating at that level of doltishness.

The end of the housing bubble may be even uglier than you ever imagined. Check out what John R. Talbott, author of "Sell Now!", has to say:

The problem, he says, is that home prices are way overvalued -- just as Internet stocks were during the 1990s before that sky collapsed. As evidence, he points to the growing discrepancy between Bay Area home prices and rents, an indicator commonly used by economists to determine a property's true value...

To buy these overvalued homes, he says, many consumers overextend themselves financially by borrowing more from banks. They end up paying an inordinately high percentage of their monthly income on mortgages. In Los Angeles, he points out, the average new homeowners, usually a young couple, are spending 55 percent of their monthly income on a mortgage payment...

Banks are lending more, he says, because they are sticking to their old qualifying formula of computing the ratio of the loan applicant's salary to the mortgage payment. They're doing this, he said, without adjusting for inflation.

"So the banks are using the same stupid formula. They convince these young couples to borrow a million-dollar note that they're never gonna get out from under..."

More:

Because of the above factors, Talbott predicts a wave of loan defaults and foreclosures. Bank presidents will be fired for making so many risky loans. The new presidents, wanting to clean up the mess, will unload the properties at a loss, perhaps for 40 to 60 cents on the dollar. This will flood the market and deflate home prices further.

And then, according to Talbott's prediction, the financial impact will, like an especially vicious virus, spread. First, the real estate industry will falter. Then, industries tied to real estate -- including banking, construction, home supply stores -- will be hurt.

"And then you've got a real recession," he says, "that will wash across the middle of the country."

Some of you may be thinking: "That will be the time to buy! Low housing prices!" Yeah, but -- in a depression, will you continue to have a job? Of course, one must ask how to reconcile the predictions of resurgent inflation, due to the printing of money to pay off our debtors, with the falling home prices that will occur once the current bubble bursts.

When that famous fan gets hit by a certain brown-n-smelly substance, rest assured that red-state idjits (the ones who keep voting for pork-lovin' Republicans) will continue to tell themselves that we got into this mess by taxing the rich and tossing too much money at welfare cheats and not praying to Jeebus often enough. Such people are beyond education.