From yesterday's Bloomberg:
The government will do ``whatever it takes'' to revive the economy, Obama said. That means ``we shouldn't worry about the deficit next year or even the year after,'' he said, adding that in the short term, ``the most important thing is that we avoid a deepening recession.''
Why do I not expect to see 1) cutting taxes to relieve the taxpayer or to raise revenues 2) reducing the size or scope of government to use scarce tax money more wisely to be on the list of things to try early.
Ignore the deficit-?
When Congress just added $5 thousand billion in new debt to the government balance sheet, PLUS tossed $300 billion in air-dropped stimulus, PLUS $700 billion in Financial Rescue, PLUS are planning an additional (pick-a-number) $300 billion, $500, billion, $600 billion in new air drop stimulus PLUS another unknown number in "infrastructure and unemployment befit extensions. (We haven't gotten to the expanded health and welfare freebies that bought the election)
Where does all the new money come from-? Selling U.S. Govt Bonds-? To foreign buyers-? Who really thinks we will -NOT- devalue the dollar to repay the fixed term debt with inflated greenbacks... Will Congress be able to avoid telling businesses how to run their businesses-? They are already demanding that banks loan good money to get the economy rolling. Don't they know how we got in this mess and why it's dragging along-? How can anyone loan against an asset when you don't know what the asset will be worth in 3-6-12 months-?
PLUS GM, FORD, CHRYSLER and their UNIONS need LIFESUPPORT for next two years... They have no way to find profits and pay back-EVER. The UAW is growing older and at $71.++/hr they are not competitive. PLUS the UAW retirees may get screwed and turn to the Pension Benefit Guarantee Funds for salvation... But find Lehman, GE and others ahead of them in line. (meaning yet-more govt money needed to bailout retirees) The NYTimes has already reduced its medical benefits to retirees. There will be many more companies dumping retiree obligations onto the government. Cleaning up balance sheets is going to be difficult and painful. No loans will flow to companies with an ugly Balance Sheet.
The Democrats cannot let the United Auto Workers suffer. I guess it means we all will share the pain of bad contracts and Congressional meddling for two to five years before they get consolidated and largely liquidated. Penn Central Auto Makers-? AmAuto Manufacturers-?
Didn't we see this with the railroads-? How successful was that-?
PLUS we still have a shooting war in Iraq and Afghanistan... And a still active and aggressive Islam-o-Terrorist enemy.
PLUS Mexico still has a shooting war against Narco-Terrorists
PLUS Venezuela is funding revolution in Argentina, Ecuador, Bolivia, Nicaragua
PLUS Russia and China are heading to Cuba to test the Monroe Doctrine.
PLUS ongoing Pentagon commitments for new toys, replacement of old equipment, expanded size of the forces to avoid burn-out from combat tours.
All of which means shrinking the military ain't gonna happen, unless we want embolden all our enemies at one time. Sorry, Barney.
Tightening the belt, shrinking personal debt and consumer demand for one-to-two years is probably not gonna be considered at all... Not politically popular... Until we find a bottom price on assets, inventories, capacity and can release the cash that America is holding- Nothing Moves...
I expect the next air drop stimulus to go towards home and small holiday bills. Credit card bills will become the next discretionary payable if they haven't already. Home Mortgage possibly already is. All the talk of mortgage renegotiation is making even those with ability wonder if they are The Fool to keep paying when the Mortgage Holder is willing to reduce-reset-renegotiate... (Is this a Moral Hazard-?)
I guess this is one way to have Gen X, Gen Y, Gen Z, all learn about economics, responsibility, frugality and work... Good thing us Boomers were inoculated early and avoided those lessons... "We" never learned em so we couldn't teach them to anyone, or so it seems many of these recent days.
"Hope" and "Change" are words into which we can toss our aspirations. "Work", "Responsibility" and "Frugality" are old fashioned ideas we will rediscover before we finish and return to the "Bush-Prosperity-Years". We will be changed but not in the way we anticipated when 2008 began. We will still have "Hope" for Americans take Hope add it to Work and Responsibility to create a better future for all of us. This is what we do. This is who we are. No people or nation does it better.
I wish our New President the best. His success (or failure) is deeply tied to that of the entire nation. His Party affiliates on The Hill may need to be reminded early that he is The President, separate but equal to all of them combined.
How's your Monday going-? Obviously, I'm ranting away trying to make sense of my newspapers and emails...