We woke up this morning wondering how things could go so wrong.  

Maybe it was something we ate. We were thinking of the economy and the war on terror, but one thought slipped into another like a bad dream. We probably began dreaming of being shipwrecked with buxom cheerleaders, and then it slid into a nightmare of globalization, serfdom and the decline and fall of empires.

The economy looks so healthy, so new, so high-tech, but people still get poor the old fashioned way: by spending more than they make. Yet, for some reason not quite clear to us, they actually think they are getting rich by doing it. The post-war, post-modern generation has come to believe that it can get rich without effort, automatically. This is â�,��"progress,â�,� and havenâ�,��"�t Americans always believed in progress? Only, today they canâ�,��"�t imagine any vision of progress that doesnâ�,��"�t include more money. So, why not spend today what they believe is guaranteed to them tomorrow?

But, across the broad, sunny Pacific, two billion people who have just entered the world economy, may put a twist into that comfortable story. The newcomers might still lack the skills and tools to be very competitive, but that is changing - and changing fast. The spending spree in America gives the foreigners piles of dollars to spend. The Middle Kingdom alone is expected to have more than $1 trillion in foreign reserves by the end of this year - and they spend it on new plants and equipment.

The new globalized capital markets are rapidly bringing both cash and technology to the place that will earn it the highest rate of return. Fifty years ago, that place was America. Now, it is Asia. So, the factories go up in Shanghai...not in Cincinnati. But still, in the Buckeye State, people hardly notice. They go about their business peacefully, even rather tickled not to have the factories. After all, that means they can now move up the socio economic ladder. Let the Asians do the sweating. They will do the thinking! The only question is, what will they think about? Most likely, it will be about how they will refinance their house, borrowing from Asian savers, in order to continue buying gadgets and gizmos, manufactured by Asian producers.

As they borrow more and more, these poor Sons of Liberty chain themselves to more and more debt. Not just theirs, but the nationâ�,��"�s. Two and a half trillion dollars in debt has been added to the federal governmentâ�,��"�s burden during the George W. Bush years; no president in American history has ever done more damage to the nationâ�,��"�s finances. Nor is this the sort of debt that will be paid off by the debtors. It is debt that will be carried forward, refinanced, and refinanced again...so that generations not yet in the womb will be shackled to millions of dollars worth of it before they even begin to toddle.

We recall a passage from Exodus, sent to us recently by a friend:

"The Lord...who forgives iniquity, transgression and sin; yet He will by no means leave the guilty unpunished, visiting the iniquity of fathers on the children and on the grandchildren to the third and fourth generations."

Oh, my...what kind of parents are we? 

Even serfs in the Dark Ages were only required to labor one day in five for their lords and masters. But future citizens in the Land of the Free wonâ�,��"�t have it so easy; they will have to work up to every other day just to pay their taxes - and service a debt incurred by strangers who died years before them. All of this laboring will be merely for cheap bread and expensive circuses. Thus, even to the third and fourth generations might our hapless heirs be punished.

And of all the expensive circuses staged by the Bush administration, one of the most expensive is the War on Terror. We say â�,�˜circusâ�,��"� because we are always looking on the bright side. And in so many ways, this war is one for the record books. It is already the longest war in U.S. history. Neither the American Revolution, nor World War I, nor Americaâ�,��"�s involvement in World War II went on for so long. 

It is also the first war in American history to be financed almost exclusively with borrowed money. The federal budget was tight enough before the war was announced, but since then, the total of federal deficits roughly equals the cost of the war. The present generation may be fighting the war, but the generations to come will be paying for it.

*** Thereâ�,��"�s a storm brewing over port security, and this time the Bush is taking heat from both parties. The Bush administration has approved a deal that would sell control of six major U.S. Ports to a company based in the United Arab Emirates. The president is pitting himself against conservatives who think that this arrangement will put our national security in danger.

â�,��"The deal should go forward,â�,� says our friend, Chris Mayer.

â�,��"First, people should understand that DP World would not own the ports, only the concessions (or contracts) to manage the ports.

â�,��"Second, security at U.S. ports is handled by the U.S. Coast Guard and U.S. Customs Service. Management companies have little to do with security. None of this changes with the deal.

â�,��"This deal was no secret. It has been reported on extensively in the financial press, as DP World was in a bidding war for P&O, eventually beating out a Singapore-owned shipping company. The deal passed all of the normal regulatory approvals.

â�,��"Dubai, located in the United Arab Emirates, is a Middle Eastern country. It is a Muslim country and as detractors are fond of pointing out, two of the 9/11 hijackers came from the UAB. Somehow, that puts everyone related to the UAB under suspicion. Politicians, and the mainstream public, are essentially acting like bigots for holding a Middle Eastern ally to a different standard. Many of the top execs at DP World are American and the port workers are Americans - regardless of who owns the concessions.

â�,��"For those who say they don't want a foreign government running our ports: well, I have a surprise for you. China already runs a terminal at the Port of Los Angeles. Singapore runs terminals in Oakland. The fact is that around the world this is commonplace. If the U.S. government is going to exclude foreign companies (even government-owned ones) from running its ports, it will only slip back further in the global competitive race, isolating it from the biggest and most efficient port operators in the world.

â�,��"U.S. ports are already inefficient, expensive and heavily-regulated. Hutchinson Ports, the world's largest port operator, won't touch the United States because of how poorly U.S. ports are managed and organized.

â�,��"All of this reflects how the United States is becoming an increasingly hostile place to do business. More and more foreign companies choose not to list their shares on American exchanges, for example. This port deal is a small piece of much larger global forces that continue eat away at America' competitiveness abroad.

â�,��"America can either encourage the open markets it so often trumpets, or it can retreat into the ugly cocoon of protectionism - with racist overtones to boot.â�,�

*** The War on Terror is also the first war in history to be launched without an identifiable enemy. It is supposed to be a war for liberty. But who is libertyâ�,��"�s enemy? Terror?   â�,��"Terrorâ�,� is a tactic, used by almost everyone at one time or another, including the United States, which means, it is the first war ever in which there is no hope of victory.  The best that be hoped for is a draw - and then, only in the short run. In the long haul, terror will be around long after the United States is past tense.

In other words, in the name of liberty the average American is enslaving himself and his children and grandchildren to debt and fighting a war, against nobody, that canâ�,��"�t possibly be won â�,�“ all while the most dynamic and flexible capitalist economy in history makes him poorer.

Irony was what was supposed to have disappeared with the World Trade Center towers on September. Suddenly, the world was supposed to work in a more straightforward way. There were good people and bad people; things were either black and white. You were either with us or against us, said Americaâ�,��"�s president.

Itâ�,��"�s too bad. The world was not as simple as the simpletons thought.

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