Signs of trouble

When the Washington Compost tells a Demoncratic president to be more fiscally conservative.

No Laughing Matter
Why the U.S. needs to get serious now about long-term budget deficits

Friday, June 5, 2009

THE OBAMA administration inherited from its predecessor both a tanking economy and a huge federal budget deficit. Under the circumstances, it cannot be faulted for increasing the deficit in the short run, because a mammoth recession called for fiscal stimulus. Thus, it is neither surprising nor irreversibly dangerous that the total federal debt held by the public looks as if it will reach 57 percent of gross domestic product by the end of fiscal 2009 on Sept. 30 -- well above the previous four decades' average of about 40 percent. What is more alarming is that, barring major spending cuts or tax increases, President Obama's budget could drive that figure to 82 percent by 2019, according to the Congressional Budget Office.

...

It was a sign of the times that Treasury Secretary Timothy F. Geithner had to travel to Beijing this week to reassure China, the world's largest holder of Treasury debt, that lending money to the U.S. government is still a wise thing to do. ...In a moment that all Americans should consider a wake-up call, Mr. Geithner was met with laughter when he told a group of Chinese students that their country's assets were "very safe" in Washington.

In the meantime, Fed Chairman Bernanke's testimony before con-gress (which, remember, is the opposite of pro-gress) has all kinds of people getting the vapors. (Although I don't see the strong language some folks say was there. Oh, well.) (And a hat tip to Tam for the link.)

Bernanke: Expects Growth Later This Yr; Not Robust
By Brian Blackstone
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)--U.S. Federal Reserve Chairman Ben Bernanke said Wednesday the U.S. will see economic growth later this year, but it won't be robust.

He also told lawmakers the Fed won't accommodate higher budget deficits by simply printing money, saying the Fed "will not monetize" the federal debt. {Emphasis added; DWD}

...

Bernanke also told lawmakers the Fed will release a list of banks next week it thinks are eligible to repay loans they received under the Troubled Asset Relief Program, or TARP.

That last bit is good news, of course.

Finally, let us all remember that, on this day in 1933, FDR banned gold.