The bubble economy was caused by the United States Federal Reserve's run of low interest rates - Greenspan's irrational exuberance.

The nail piercing this bubble is the Iraq war, which has, so far, has cost the US $500 billion in military expenditures and about $1 trillion by such "unintended?" consequences as the rising price of crude oil and hidden inflation.

The transfer of wealth out of the United States for crude oil has been massive - an unbelievable $70 trillion over the past 30 years. You will not hear this from the news media, nor that that the cost to produce a barrel of oil in Saudi Arabia and other Middle Eastern countries is slightly under $2.00.

The United States hopes for the sovereign funds of these Middle Eastern countries to bail us out. Even tiny Singapore is making a $4 billion investment in Merrill Lynch.

The sovereign funds are buying America only to exchange their dollars for assets they hope will survive.

This gamble on the part of the Middle Eastern countries and Singapore may not pay off as the United States economy sinks due to the endless waste of assets in Iraq.

Junk bond interest rates in the United States are around 9.4%. Bearing this in mind, it is startling that a Citibank is paying a whopping 11% on a $7.5 billion convertible preferred loan from Abu Dhabi. If Citibank is paying a higher interest rate than a sub-prime mortgage lender, can we believe that there will be any affordable mortgage loans left?

The United States won the Cold War because the Soviet Union ran out of funds to compete in the arms race. The Soviet Union was defeated financially.

The sub-prime mortgage fiasco is only a symptom, used by the media to hide the real problem. The root cause is the fact that United States is losing the war on terror (whatever that may be) for the same reason that the Soviet Union lost the Cold War - lack of funds.

Is the United States being defeated Osama and friends?

Seems likely.

Stay tuned...