You know it's bad if the notorious deregulator, bad trade deal promoter, DLC Economist Larry Summers is calling the economy sick and halfway through a lost decade:

ABC News reported an interview with with Paul Krugman last week his opinions that:

"I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer," he said June 8 during a lecture in London.

However, Krugman argues people didn't listen to his entire speech, which included dire predictions about lingering unemployment. "There's a big difference between the end of a recession, which is really only when some things start to turn up, and the return to prosperity," Krugman told ABC News. "I think what people don't get is the difference between the end of a recession in a technical sense and actual recovery, which matters to people."

In my opinion, Krugman is exactly correct. In this four-part "Big Picture" look at the economy as of Independence Day 2009, I will argue that:

Most people think that all you need to maintain an empire is guns, bombs, and soldiers. They are wrong.
To maintain an empire what you need above all else is money. Lots and lots of money. A victorious army in the field is useless without the wealth behind it.

A good example of this is the Suez Crisis of 1956, which marked the end to the British Empire.
America is following in Britain's footsteps.

Britain's attempt to strong-arm Egypt had indirectly caused a nationalist backlash and Gamal Abdul Nasser's rise to power. When Nasser nationalized the Suez Canal, Israel, France, and Britain invaded and quickly routed the Egyptian army.
But they had forgotten to do one thing - clear it with America.

In Part I of this series, I examined the 1992 best seller entitled "Bankruptcy 1995", which had predicted that the US would become unable to service its national debt as early as 1995 due to soaring budget deficits. So dire and well-documented was the warning that it affected the outcome of the 1992 presidential election, helping to elect Bill Clinton. In light of new looting of the national treasury by George W. Bush and the Republican Congress, I re-read the book to see if any of its predictions were now coming true. I posted those predictions, and the book's thesis that continued budget deficits would drive up interest rates and lead to "Death by Hyperinflation" or "Death by Panic" in Part I.
But "Bankruptcy 1995" obviously didn't happen, in spite of the fact that deficits have continued to be run nearly every year since then. Only part of the reason was the fiscally responsible Clinton tax and budget plan that began in 1993. In this diary I examine how a long-term, continuous decline in interest rates has actually reduced the carrying costs of the National Debt, and why that means the sky Hasn't fallen -- yet.