The days of our fin de bubble summer really are dwindling down to a precious few. In fact, there is only one left.

Not that summer will be officially over; that won't happen for three more weeks. But tomorrow every child in France returns home, buys his school supplies and braces himself for the beginning of a new school year.

Our family follows a slightly different schedule; we're moving to London. So, we'll leave here on Friday. The children begin school on Monday.

In the meantime, we're still thinking about the remarkable, sidesplitting comedy in front of us.

Last week, Alan Greenspan warned the nation:

“History has not dealt kindly with the aftermath of protracted periods of low risk premiums...Such an increase in market value is too often viewed by market participants as structural and permanent.

"Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes liquidation of the debt that supported higher prices."

It must have slipped his memory that it was he who created risk premiums as low as any ever seen in America; in any case he failed to mention it. Nor did he recall that as recently as a few months ago he assured the nation that its swelling mortgage debt was no problem...nor did he ‘fess up to having urged homeowners to avail themselves of greater credit opportunities offered by innovative lenders.

But that's just our adorable Maestro...

What is happening just under the Fed chairman's nose is that consumers are running out of money. Oil hit nearly $70 a barrel yesterday. If it rises another $10 it will equal the shock of the oil crisis of the ‘70s, which threw the U.S. economy into its worst recession since the Great Depression. Already, every time the poor householder fills up his tank he has less money left over to buy other things. Convenience stores report, for example, that they are selling fewer snacks; all the money is going into the tank.

For the moment, the consumer is still confident. He believes all is well.

“US consumer confidence stronger than expected,” says a Financial Times headline. Consumers are simply charging fuel on credit cards - they'll worry about how to pay the bill tomorrow.

But that's the problem with credit expansions; tomorrow always comes.

Today is already yesterday's tomorrow. Today, yesterday's bills are coming due. A Reuters headline tells us that more “Workers say they are falling behind.” There should be no surprise there. They owe more money to more people than ever before. They are still buying newer cars and bigger houses, but they are giving up their financial independence and security to keep up with the bills. “Number of Americans without health care increases for fourth year,” says a headline from yesterday. A few weeks ago, we reported that more Americans face retirement with empty pockets. Company retirement programs have been replaced with individual 401(k)s. But, under the stress of keeping up with appearances, people tend to ignore them.

In short, Americans are ruining themselves.

And why shouldn't they? Everyone has to play the role he is given. Why must Americans play the parts of people who are ruining themselves? Because “history does not deal kindly with the aftermath of protracted periods of low risk premiums,” to quote a reliable source. America has been largely spared the devastation of the 20th century's wars. She has gained market share over most of the period...she became the world's largest economy early in the 20th century...and grew stronger and stronger, until she became the undisputed Alpha Nation...the world's only superpower...and the planet's only real empire. Investing in America was a fairly low risk proposition. The risks were seen as so low that Americans gradually gave up the cautious virtues that made them great; there is no need to save for a rainy day when there are no clouds in the sky...

And now, assuming we are right about where we are in the cycle, we face the downside...the aftermath. Investing in America now is no longer a low-risk proposition. Now it is a high-risk proposition. Its stocks are expensive. Its factories are old. Its real estate is in a bubble. Its workers are overpaid, compared to Asian competitors. Its bonds are denominated in a currency with no backing - other than the full faith and credit of the world's biggest debtor.

Of course, Americans could have held back. They might never have bought Amazon at 200 times earnings at the end of the ‘90s, and thus avoided the NASDAQ meltdown. They might have elected a conservative president and have avoided the costs of the war in Iraq...and the explosion in Federal spending. And even now, they might restrain themselves; they might cut back their spending and reduce the trade deficit. They might tighten their belts and pay down their credit cards and equity lines. They might tell their legislators to reduce the deficit. “Give us fewer services and fewer handouts,” they might say. “Raise our taxes...we don't want to live beyond our means.” Yes...they might even sell their SUVs and hop to work!

That is the marvelously entertaining thing about modern economics...people can always be counted on to do the absurd and idiotic thing. Americans find themselves on top of the world. Now they must find a way to slip off! Otherwise, history would stop in its tracks...and we would have to stop writing. There would be nothing further to reckon with...

So you see, dear reader, Americans ruin themselves for us. For our amusement. And to give us an occupation. Isn't that nice of them?

*** The outlook is looking bleaker by the minute in New Orleans. Two levees broke yesterday, and swamped around 80% of the below-sea-level city - rendering it inhabitable for an undetermined amount of time.

“We are looking at 12 to 16 weeks before people can come in," Mayor Ray Nagin said on ABC's "Good Morning America, "and the other issue that's concerning me is we have dead bodies in the water. At some point in time the dead bodies are going to start to create a serious disease issue."

After the levees broke, army engineers have been trying to plug them with giant sandbags and concrete barriers, but to little avail. The Chinook helicopters that the Army Corps. Of Engineers have planned to use had trouble getting the 3,000 pound sandbags to the site because of the massive amounts of debris clogging New Orleans' waterways.

The death toll in Louisiana is unknown, as Louisiana officials put counting deaths on the backburner and decided to focus on rescuing the survivors. The Red Cross reported it had about 40,000 people in 200 shelters across the area in one of the biggest urban disasters the nation has ever seen.

*** “Wait a minute,” Elizabeth objected this morning. “You seem to be saying that history merely runs along in its own current and that we are powerless to do anything about it. If you're right, it doesn't matter what we do or say. And all the debate about what we should do as a nation is meaningless; it is just so much hot air. Because history has a mind of its own...and maybe a purpose of its own. What we think is irrelevant.”

“Well...yes...” we replied, perhaps exaggerating.

*** Ooh la la...homebuilding stocks are probably the bellwethers of the real estate bubble. And the homebuilders are going down. Worse, yesterday's news brought word that the insiders were bailing out.

“Homebuilding insiders on selling spree,” said CBS Marketwatch.

*** GM and Ford sold cars at a loss for the first half of the year. GM says it is closing more plants. This is bad news for the economy, but good news for the empire. The unemployed factory workers might be lured into the army.

We notice in reading John Keegan's “A History of Warfare” that the Romans too were aided by a bad agricultural economy. By the time of the Punic Wars, the small landholdings apparently became less profitable. Soldiering seemed an attractive alternative.

By the way, we're are putting the final touches on our book, Empire of Debt this week. We received this e-mail yesterday from Addison, toiling away in Baltimore:

“Bill, I got a load of charts back today from the designer. I just looked through them... and by the time I got to the end I actually had chills running up my spine. Each chart looks the same Corporate, Municipal, Federal, Consumer, Revolving, Mortgage, Subprime, ... all trundle along until the mid seventies then skyrocket. So much, so fast... it's hard to draw any conclusions at the outset.

”Here's one: Home mortgages and corporate debt, both, are approaching $9 trillion... so combined they're approaching twice GDP. More to come...”

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.