Senator Barack Obama is now President-Elect Obama. The crowds went wild in Grant Park and Times Square. Certainly, it’s a historic event - an African American candidate breaks the color barrier. But, there are many more accomplished and experienced African Americans who were ignored by their own parties, the media and voters in general. Why this guy? In any case, we’re stuck with our choices good, bad or indifferent. The Obama administration and a largely Democratic Congress will now shove through legislation and programs that will grow government and limit our personal and economic freedoms. It will be unprecedented in American history. Franklin Delano Roosevelt was a socialist elitist who firmly believed in and enforced a class hierarchy in the US. Lyndon Baines Johnson was a socialist elitist who firmly believed in a morally and ethicly ambivalent society. But, neither man was so brazen as to promise he would dismantle the protections of the Constitution and call for an internal, civilian security force equal in power and funding to our military. And neither man openly promised forced redistribution of wealth, pitting one class of Americans against another.

This will come as a rude shock to those who think that Obama will pay for their gasoline, pay their mortgages and give them ‘free’ health care. It will never happen. Instead, every form of taxation will be increased and new taxes will be instituted. Everyone will suffer. If you thought medical care was expensive, time-consuming and frustrating, wait until the government gets involved. You’ll be waiting line for an aspirin. There is nothing that our government does exceptionally well, with a few colossally expensive exceptions — aerospace and defense. And the reason these two areas can point to incredible technical and operational achievements is because cost, the taxpayer’s liability, is no object. Get ready for a $20 bottle of aspirin coming to a drugstore near you. Oh, that triple bypass that will save your life? You’ll have to wait 10 years. But, if you’re politically connected, perhaps a Democratic party apparatchik, you’ll be in and out in 4 days.

Once Fannie Mae and Freddie Mac were taken over by the government, it wasn’t much of a stretch to have the government invest in private sector banks, buy their bad loans and generally reward poor performance. When the guys at GM got wind of the handouts, they wanted some, too. And then Arnold let Washington know that California wasn’t doing so well, either. Not be outdone, New Hampshire jumped up and starting squawking, too. Cities and counties threatened to default on their bonds. Everyone was jumping on the bailout bandwagon. But, the tractor pulling the bandwagon was running on empty.

Lost in the glare of media attention was a move by the Fed to pump $600 billion in freshly printed, unbacked dolars into the banking system to ‘create liquidity’ a day before the bailout bill was signed into law. Just a few weeks before that move, the Fed had already started shoveling money out the window with its special lending deals to banks and financial holding companies. Once the bailout package was enacted, several of the largest banks in the country (and the world) took advantage of the government funding and mortgage buybacks. The banks were supposed take this cheap money and immediately start lending it to their best customers at reasonable rates. They didn’t. Some of them sat on the money, waiting for market opportunities they could exploit with their huge piles of cheap cash. Others targeted smaller regional banks for acquisition. And a few started buying up the very same mortgage pools that they’d abandoned just a few weeks ago. The only difference is that these mortgage securities and derivatives were now priced way below market. A bargain, especially if you’re flush with billions of borrowed taxpayer dollars. What about lending to small business and consumers? You must be kidding.

Treasury Secretary Paulson is a smart man. He’s been under enormous pressure to save the US and world economies from annihilation, and he’s partly succeeded. What neither he nor anyone associated with the bailout package can prevent are the unintended consequences. Banks, investors, hedge funds, state budget directors, bond traders, insurers and even auto executives started to game the system, looking for ways to get a piece of this trillion dollar bonanza. The bailout package was probably a good idea. Only time will tell. Something had to be done to pump up confidence and nothing works better than a flood of money. But, even though the printing presses are running day and night, even the US Treasury will find a bottom to that wheelbarrow of cash. Printing even more money can flip deflation caused by a growing recession into hyperinflation in an eyeblink. This country could be facing the specter of stagflation, when the economy is in recession but prices spiral out of control.

For the last month, business TV pundits talked about ‘testing new lows’ in the stock markets and ‘credit freezes’ for businesses. What’s lurking in the background is something way bigger - national defaults. Russia is on the verge of reneging on its foreign debt. Again. Given the fragility of both the equity and debt markets around the world, a Russian default would have devastating consequences worldwide. And they have the mendacity to do it. What Russia lost in the Cold War, it can win back here and now. With financial markets underwater, America, Europe and a few affluent Asian countries cannot float the entire world. Russia and its old allies, the oil-rich Muslim nations of the middle East, can make their moves unimpeded. What they’ll do and how far they take it is anyone’s guess. Let’s hope they lose their nerve.