You might think the Dow at 13,000 is good news but it is a reflection only of zero interest rates and a flood of cash with no where else to go. Big Ben, the man who took us to zero knows there is potential disaster looming and he knows he is shooting blanks. It is a matter of when, and not if interest rates rise. Sooner or later, the Chinas of the world will expect a return on the money they loan the U.S. He should be worried. Here’s what Bernanke said February 29th:
Bernanke, in presenting his semiannual report on monetary policy and the economy, acknowledged recent improvement in the labor market, including the nearly 260,000 private-sector jobs added in January.
But he said that Fed policymakers did not expect “further substantial declines” in the jobless rate this year and that the sharp drop in the unemployment rate to 8.3 percent in January from 9.1 percent last August was somewhat out of sync with the moderate pace of growth.
“The job market remains far from normal,” he told the House Committee on Financial Services. He said he remains especially concerned about near-record numbers of the long-term unemployed, whose skills tend to erode over time.
Bernanke had a more sanguine view of the recent increase in oil prices, which he said will pinch consumer pocketbooks, but only temporarily.
He said inflation over the long haul probably will remain subdued, presumably at or below the Fed’s 2 percent target.
He blamed the jump in crude prices on supply constraints stemming from tensions with Iran and elsewhere, but declined to say whether the U.S. should dip into the nation’s strategic oil reserves, as some Republicans in Congress have urged.
snip and cut to the chase:
Under current law, “there’s going to be a massive fiscal cliff of large spending cuts and tax increases” next Jan. 1, he said, referring to the scheduled expirations of the Bush-era tax cuts and the payroll tax holiday, among other things.
“I hope that Congress will look at that and figure out ways to achieve the same long-run fiscal improvements without having it all happen in one day,” he said. DON LEE,
Tribune Washington Bureau
What are the chances of Harry Reid and the Democrat controlled Senate do anything on budget issues? We are well over a 1000 days without a budget and Reid has already said there is no way he’s letting Obama’s budget come to the floor. This leaves us with the current insane level of spending which has now locked into the baseline the $800 billion of emergency spending approved in 2009. The congresscritters just can’t seem to find a place to cut any of it.
A fair minded observer will note that Speaker Boehner and Minority Leader McConnell have been way too accommodating of Obama’s wild spending. Their main goal appears to be to get Republican control of the largesse. This may be true but the real damage was done during the first two years of Obama when he enjoyed big Democrat majorities in both the Senate and House. Whatever the weepy Boehner tried in the months after the November 2010 election never saw consideration in Reid’s Democrat controlled Senate.
So, your children are further buried under the blizzard of Obama’s spending
The Congressional Budget Office just announced that the deficit will be $229 billion for February, the highest on record. About now you are thinking our government is destroying the dollars in your wallet and you are right. Your government is borrowing 42 cents of every dollar spent. While you fume over this, consider that the trade deficit jumped dramatically in January. That’s right, it is taking more dollars to buy the same stuff, especially oil and most any other commodity. While Bernanke and Obama will point to increasing imports as a sign the economy is improving, it is more likely the consequence of the deflated dollar and speculation (buy now, the price is going up).
With the election looming, Democrats are going to double down on their specious arguments supporting the insane spending. They will say deficits do not matter because we owe it to ourselves. I don’t know about you, but I think most Americans want to see their investments returned to them and not at half value. They do not want their grandchildren faced with a burden so huge that the great American dream of upward mobility becomes a only a distant remembrance.
It comes down to this. Obama has blown a catastrophic hole in the deficit. It has been on his watch, with him cheerleading. Obama’s trainwreck is no Fluke and so do not be distracted from job one . . . the firing of Obama.