Perhaps things aren’t as rosy in the economy as the banksters and Obama want us to believe?
…it’s hardly surprising that a massive debt-financed stimulus has led to an uptick in economic activity. The question is whether or not it will enhance long-term growth in light of the impact of a heavy public debt burden going forward. Has it moved the economy in the right direction by facilitating the liquidation of bad bets made during the housing boom, a process that might dampen GDP expansion in the short term while enhancing long-term growth? That is an entirely different question. As Jeffrey Sachs has argued, the United States has been engaging in extreme policy swings throughout the Greenspan era, veering from recession to bubble and back again. By running a double-digit budget deficit, we’ve severely limited our options in the face of the next economic crisis, all without making the painful adjustments—to tax rates, to spending, to the bloated financial sector—that would make another crisis less likely.
That’s my case for economic pessimism. I sure hope I’m wrong. But I get the distinct impression that we’re walking into a decade-long buzzsaw.
But that’s not all – Dollar Collapse has more:
* We’ve replaced the housing bubble with a government debt bubble, and there’s no way to transition back to private sector-led growth. The amount of debt needed to fuel an economy this unbalanced is simply too great.
* Some kind of serious negative event is virtually a lock in the coming year. It might be the spread of Wall Street lawsuits or a PIGS country default. Or the bond market might simply decide it’s eaten enough and get up from the table. No way to know what it will be, but we’ve created the conditions for another nasty “surprise”.
It ain’t over, not by a long shot. When will it hit? Beats all heck out of me. And, in fact, there can still be a lot of money made in this bubble by a savvy investor – but timing will be everything. How to predict just when we’re about to crash?
As I can’t do that, I’m staying out.
UPDATE: Alternately – as in “alternate universe” – the New York Times wonders if the “boom” will get bigger. You can bet with the NY Times, if you like. I won’t.
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