US faces global funding crisis, warns Merrill Lynch

Don't worry about all the gloomy economic news -- the Wise Ones in DC have everything under -- wait, what's this? Uh-oh:

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. ...

"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.

"It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies."

Traditional wisdom says, do not go into debt, but the know-it-all Bushies, fancying themselves able to create their own reality, were convinced such dusty rules didn't apply to them -- just as the Constitution and other bothersome laws don't apply to them.

Now we're beginning to see there's a price for ignoring time-tested lessons. It'll be interesting to see how long it takes us to learn them again.