Ok so if the banks are bailed out yet again then who is going to bail out the government? The treasury auction last week was considered a failure by Rick Santelli and the Chinese have already begun to dump their US holdings. Game, set match, nothing left to do but let capitalism determine the true value of real estate.
The Federal Reserve will act as it always does as the buyer of last resort. Remember that it is not part of the US and is a private for-profit corporation. As the US owes more and more to the Federal Reserve, we’ll pay them more and more interest and their shareholders will reap the return. The endgame will come when we can no longer raise enough revenue to pay the interest on the debt; at that point the bank will be able to call in “austerity measures” through the IMF and World Bank. This means the selling off of public infrastructure to pay the debts. What will happen then is that the federal highways will become toll roads, the national parks will become owned by Disney, the Alaskan oil reserves owned by BP, etc… There will be massive layoffs of government employees, breakups of state-owned companies like GM, cancellation of retiree benefits and pensions, cancellation or drastic cutbacks in Medicare and Social Security benefits, and probably forfeiture of private 401Ks. It will go down here like a giant version of Argentina.