Wednesday, April 01, 2009

Federal Budget Madness: Even Budget Director Osrszag Thinks It’s Unsustainable

GREGORY (Meet the Press): Let’s move on to the budget and the deficit picture that you referenced just a moment ago. The Washington Examiner reported this this week: “Last week in a little-noticed conference call featuring Budget Director Peter Orszag. … [Orszag was asked:] Are those deficits sustainable? Relenting, Orszag said such deficits, in the range of 5 percent of the gross domestic product, “would lead to rising debt-to-GDP ratios in a manner that would ultimately not be sustainable.”…., Obama’s Budget, Embracing Our Inner ‘No’, Jennifer Rubin, Pajamas Media, 3/30/2009

This is a little like buying a $50,000 car on credit, then immediately telling the bank that you don’t think that you can sustain the payments schedule. With a banker, this means eating a car loan, taking a car that has already depreciated ten percent by just leaving the showroom, and then having to re-sell it to someone who can make the payments. Actually, what it’s most like is how bankers handled NINJA loans (no income, no job or assets), strongly encouraged by relentless enforcement of diversity loan demands authorized by Congress under the Community Reinvestment Act. You know very well what happened there. Special people don’t have to pay their creditors back, special people in a range from a speculator who walks away from an underwater mortgage on a house he never lived in to the politicians, regulators, and bankers who handed our financial system over to con artists. If even the President’s Budget Director thinks the transformation is unaffordable, what are they trying to prove?

We’re not on the best of terms with the Chinese. It is fair to say that Red leaders in the People’s Republic might have certain biases. However, even the top Red in Beijing knows what’s going on. The deficits are going to be a tool to encourage the printing of enough dollars to devalue the vast debt held by the Federal government. We have other concerns than a few pissed off investors in the U.S. There are some people who might consider the devaluation of what had been promised as good paper as a cassus belli. Want to fight a world war to save Citibank? Does the President even know what's at stake?


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