While wandering thru the tubes of the Internetz, I’ve read the ramblings of those who think the Obama adminstration will lead the US down the path to “European socialism” and “secularization”, whatever the hell that means.
Yesterday, the CBO released their forecast for FY2009, which states that the national budget deficit could hit the unheard of level of $1.2 TRILLION. Naturally, this is causing some consternation on the right as it is a rather strong indication that the economic policies promoted by the Republican Party since the days of Goldwater and Reagan don’t work in the real world. Nah. You know that they won’t admit that. It’s all the fault of the “most liberal Senator, evah!”
Bill Gross, CIO of the PIMCO Group, an investment management firm wrote a letter to ‘President’ Obama in JULY, 2008 which is incredibly prescient.
Dear President Obama:
You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans. He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love. Over eight years, he failed to put forth a coherent energy policy. He needlessly invaded Iraq and lowered worldwide esteem for this nation as a symbol of freedom and benevolence.
But enough about W’s spilt milk. I’ve already ticked off so many readers that they’re questioning my Republican Party voter registration. What do I think you should do as the new President to rectify this mess? All I know is that any solution will come with a high price tag.
Now, please note that Mr Gross wrote this seven months ago, as he continues:
But you’ll have your tax bill and your healthcare bill and your housing fix, and somehow it’ll all be paid for by wealthy hedge fund managers, oil companies or, pray tell, a robust economy that’s creating good jobs at home instead of exporting them abroad. Uh, I don’t think so, Mr. President. That’s where the “yes we can” morphs into “no we can’t.” Not that you won’t accomplish most of that – the robust economy and the good jobs notwithstanding. It’s just that you won’t be able to pay for it and it’s better to admit it now as opposed to later. No David Stockman confessions in your administration. You’re smarter than Ronald Reagan and too nice of a guy to distort reality like King George. So let’s start out by dropping all of that “budget neutral” rhetoric and admit where we’re headed. Your administration will produce this nation’s first trillion dollar deficit!
While the Republicans will blame you for years and label you “Trillion Dollar Obama” in future campaigns, there is in fact not much that you or any other President can do. You’ve inherited an asset-based economy whose well has been pumped nearly dry with lower and lower interest rates and lender of last resort liquidity provisions that have managed to support Ponzi-style prosperity in recent years.
Go and read the entire letter, it is worth the effort.
Some of those on the right in addition to complaining about the ‘libruls with their tax and spend policies’ are also worried that the present financial meltdown means China will be taking over all of those assets once owned by Americans. Probably not gonna happen, the Chinese economy is not doing so well either. From Reuters
China factories cut output at record pace
BEIJING (Reuters) – Chinese factories slashed output and workers at a record pace in December and manufacturing activity overall fell for a fifth month …
The figures, … spell further gloom ahead for the Chinese economy and highlight the urgency with which the government is trying to cushion the country from the effects of the global crisis.