The US is providing 'free' debt through easy credit rather than free money. This cannot go on forever. Eventually the debt that has saturated the economy will become unsupportable and the 'house of cards' (IOUs in this case)will collapse under its own weight. IMO that point is not very far away.

Losses already incured, due for instance to the decline in the housing market or commodity trading losses in the derivatives market, are currently being disguised through shell games (ie moving losses around rather than declaring them). They are also being effectively veiled through reliance on credit-rating agencies which will not downgrade entities they rate, unless forced to do so by declared losses, for fear of losing business. The conflict of interest is evident. As was the case with Enron, companies may only be downgraded near the very end, creating a situation where everyone tries to make it through the exit at once when the downgrade finally comes. Needless to say, this is a crash scenario!

On-going coverage of the global credit bubble is provided in the Round-Ups at TOD:Canada.