Competent policy-making! I have to leave that alone, or I'll never get this written. Moving on. Moody's also stated that the recent round of bailouts totaling $785 billion "raises the question of how much more debt and risk the U.S. government can assume before it starts imperiling its AAA rating."

This is Earth-shattering news! Yes. They affirmed the rating. But the fact that a rating service felt compelled to even comment on the "risk-free" status of the U.S. government is monumental. Questioning how much more the U.S. can borrow without impacting its credit rating is equally mastadonic.

I've warned that these bailouts are not free and that any bailout is ultimately coming from borrowing, largely from our Asian friends. At some point, our creditors will cast a more critical eye on our balance sheet. Ironically, the more money the U.S. government throws at cleaning up the balance sheet of the private financial system, the more damage it does to its own balance sheet.

Over the last 12 months, the U.S. government has paid $431 billion in interest expense on the national debt. This is the third largest expense in the federal budget. Once our creditors begin to fully appreciate the magnitude of our on-balance sheet and off-balance sheet debt, they are very likely to demand a higher interest rate on Treasuries to compensate for their increased risk. Every 1% more that our government has to pay in yield on its debt works out to another $100 billion of interest expense each year.

Let's also not forget that in such a scenario, it's likely that the value of the dollar will be weakening, destroying the purchasing power of Americans. The abundance of dollars printed up to fund our spending and bailouts is also likely to flow through to inflation, particularly commodity inflation (in my opinion).

There have been plenty of headlines highlighting the $29 billion bailout of Bear Stearns, the $200(+) billion bailout of Fannie and Freddie, the $85 billion bailout of AIG, and the now-proposed $700 billion bailout of (insert names here). But when we're tallying the true and ultimate cost of these government bailouts, let's not forget the follow-on effects and their costs. The cost of higher interest expense, higher inflation, and a weaker dollar will likely far exceed the "hard" costs of the bailouts.

Moody's was late to the funeral on plenty of tech and telecom stocks as well as countless mortgage-related securities, but it actually appears they're being a little proactive this go around. I remain bearish on the dollar and bullish on gold/silver.

Disclosure: The Rubbernecker is busy gilding the interior of his bunker.