There’s a long, chart-ridden, article in the Asia Times that should make any American shudder:
The United States government needs to borrow US$1 trillion a year, before a new stimulus package, or handouts for the auto industry, or healthcare reform, or a dozen other spending programs promised by the incoming administration of president-elect Barack Obama. Where will the Treasury find the money?
A bizarre jump in the US Treasury’s real cost of borrowing points to severe market disruption if the Treasury deficit continues to rise. It appears that the Treasury market is also a victim of global de-leveraging. The new administration has far less budgetary flexibility that it seems to think. In 1981, under comparable
(…)
[T]he more the US government tries to bail out businesses and households, the more bailing out the economy will need. The Bush administration’s response to the financial crisis, and the likely content of the Obama administration’s economic program, will deepen and prolong the economic downturn.
There’s a good deal of technical analysis in the article to support the conclusions, and it all looks pretty solid to me.
Please, someone tell me that I and the author are wrong.
H/T: Rod Dreher
November 13th, 2008 at 12:43 pm
Yup, totally screwed. And we know where the Treasury will find the money – it will print it. The longer this mess goes on, the more convinced I am that nobody in the Government has any idea what they have on their hands here, nor do they have any idea how to approach fixing it. Most of the concern seems to be toward protecting our ability to borrow, borrow, borrow, spend, spend, spend, and who cares where it will all lead.