History has well documented the mania and the aftermath of the South Sea and Dutch tulip mania and the mind-boggling price for assets of trivial value. More recently the Japanese real estate bubble with the Imperial palace and surrounding areas valued higher than all the real estate in California and the 14 year deflationary cycle with devastating consequences comes to mind. The 2000 Nasdaq bubble valued the market capitalization of Microsoft and Cisco individually more than the India's total GDP. The subsequent meltdown is still fresh in our minds.

The person responsible for the debacle is the much-revered Federal Reserve Chairman Greenspan. He uttered a single remark about irrational exuberance, but refused to take prudent action like raising the margin rates or the Fed funds rate. He opened the spigots of monetary policy and created money at a high rate. The flood of money inflated financial assets while bailing out irresponsible banks that lent to Mexico and allowed Long Term Capital Management Hedge fund to avoid bankruptcy. Money chasing stocks led to stratospheric stock prices. Savvy insiders with their crony boards reaped windfall profits from more than generous and fair stock options and paid small portions of the loot to the treasury in income taxes, which led to the surpluses of the Clinton era. There was no smartness or policy of Clinton that brought about his boast of fiscal responsibility. It was a temporary and transient bonanza destined to vanish.

The collapse of the bubble and terrorist attacks that led to the market meltdown required remedies, and one trick pony Greenspan with his solitary repertoire, primed the pumps again, this time creating a housing bubble and re-inflating the collapsed market bubble. His other sin is that he did not protest or oppose the tax cuts tilted to the wealthy by Bush, while he lectured incessantly to Clinton about fiscal responsibility. He knew better than anybody else that projected future surpluses in the budget were bogus and unrealistic like smoke and mirrors, and yet took a partisan stance by abandoning his impartial duty and responsibility.

To add insult to injury, there was mindless Bush with his monomania of tax cuts, adding fiscal policy insanity to the madness of wrong monetary policies. His profligate spending, lack of use of a restraining veto and misadventure in Iraq with delusions of power and grandeur, compounded the problems. Thus in spite of spiraling budget, trade and current account deficits and a collapsing dollar due for a dead cat bounce soon, the market soars on like the band playing merrily on a sinking Titanic of America.

There is a simple principle that individuals or nations cannot live beyond their means forever. We have to increase our saving rate and reduce consumption to decrease the trade deficit. It will be necessary to reduce budget outlays, increase the retirement age and reduce Medicare and Social Security benefits to produce budget surpluses to reduce the national debt. In addition there will have to be a severe drop in the dollar's value to make our manufacturing and exports competitive and to start running a trade surplus. These are unpalatable choices for a national psyche addicted to irresponsibility and instant gratification. The easy alternative is default like Russia and Argentina. We have done that before by depriving British investors in our railroads, but that was easy because they were private corporations and could declare bankruptcy.

Sovereign nations, especially if they are superpowers are reluctant to do so as the result is a marginal status on the world stage, as Russia's case illustrates. Fortunately the unsophisticated Chinese Central Bank is investing in mortgage-backed securities that have the option of default. A part of the debt owned by China is likely to be squashed with rising interest rates and mortgage foreclosures from the foolish public that has been suckered into taking zero down payment, interest only and adjusted rate loans by the innovative lenders.

Shockingly, Greenspan has irresponsibly promoted ARMs for short-term low payments without warning about long-term disasters as interest rates rise. A more acceptable alternative to this cowboy administration with imperial hubris and military superiority, is starting pre-emptive wars to control natural resources and to have a stranglehold on the energy supplies of EU and Japan, to curb their centrifugal tendencies and maintain them in a tight orbit of our choice. A crash in the market and housing is likely to occur in the near future and a great unraveling as Paul Krugman, Robert Rubin and Pete Peterson have predicted. Indian markets and economy will not be immune from the fallout.

All these shenanigans will defraud the current American public of promised health and retirement benefits, while putting an immense enslaving burden on future generations. This leaves America in the position of Blanche Dubois in Tennessee Williams' play, 'A Streetcar Named Desire', viz. dependent on the kindness of strangers. A deadly combination of a knave and a fool has undone America.