Hope Laws of Economies Won't Work in Extreme Conditions

They say when it comes it comes big…………… its more like a last straw on camel’s back. Things may keep piling up the straws and nobody notices till camel finally goes down.
First we as individuals were introduced to the life of credit. Its so cool concept, one can live on something that we haven’t earned. We can live life on credit and be happy about it. Though this doesn’t stop here than we have companies who decide they can live on credit and hedge on future income through banks. Than we took next step ahead and banks started living on credit on future income, and finally there is no where income is going to come from, so we look at crash.
May be its not this simple, there are lots of systems, companies and instruments build around to keep the money flow going. So there are valuations to give credit, and there are risk ratings etc. etc. Though core of the challenge remains that we had reversed the flow of money, money was suppose to go to a place where it sees value. We turned the game on its head and we put the money first since we thought that there will be value. Finally when for once value didn’t come we needed to turn the tide, reverse the flow. Though that wasn’t part of equation, and neither natural, hence somebody has to pay the price and fill the gap.
For people not being able to pay credit, many of us paid in some way i.e. late payment interests, annual charges, discounts from retailers that should have come to us all were/are payments we made for defaulters. We reached a state that credit failing started messing up so big, that banks started failing. Hence we had countries bailing out banks on credit, so effectively again good people and good banks and companies are paying for bad ones.
The way I look at it equation is simple. The banks used our money (post tax money), now they are using my tax money (we paid to government) to bail themselves out. Hence it’s surely a case of good guys paying for bad guys. This is very small part of the problem, we are sitting on a much larger and scary prospect here...
Here we are sitting at a level where companies do fail and is expected and part of life and we are getting used to it. We are reaching second stage where we are getting used to banks failing. We are sitting at the onset of third phase of decadence that countries may start failing, since these are the countries that are now supporting the failing people, companies and banks.
The standard laws of physics don't work in extreme material conditions and that's true for most of the laws. So hopefully basic economic laws won't work when we reach at final frontier of countries living on credit and failing due to credit crunch and I hope we will be able to save this planet.
Save this planet, am I going overboard, I think not, since once a country defaults, it has to increase consumption, and one way to do that is WAR, so last resort of a country when it defaults on credit is war, US is keeping its economy going precisely by war for last many years. Hopefully we won't reach there.......... hopefully laws of economies like many other laws won’t work in extreme final frontier and we will be saved…