John Baden writes,

there is diminishing support for institutions that generate wealth rather than redistribute it…both positive and negative values increasingly converge and agglutinate. This promotes substantial class differences. If one is blessed with responsible parents, intelligence, favorable genetics, health, presentable appearance, and the ability to defer gratification, she is exceeding likely to prosper–and to marry one with similar characteristics. However, everyone has one vote. The political calculus is obvious and on bold display; promising voters public largess brings victory and dependency.

Read the whole thing.

Another point I would make, related to the Juan Enriquez talk that I pointed to yesterday, is that we are acting as if we have a lot of fiscal slack. That is, all of a sudden everybody wants the government to provide bailouts and relief, and nobody cares about the deficits that might result.

In Europe, my guess is that they do not have the slack. At some point, their welfare states may be unsustainable, and lenders may start to worry about that. Here at home, I wonder how state and local governments will sustain spending–see New York state. At some point, world investors may decide that U.S. Treasury securities are no longer the risk-free asset.

[UPDATE: My last point is echoed by this blogger.

Once the deleveraging of the markets subsides, the dollar and Treasuries will drop, perhaps with some momentum, as the rest of the world realizes that the US has no choice but to default.

The question I keep asking friends is, “Where should you put your money now?”]