Friday, November 19, 2004

SO, WHAT'S THE PLAN?

I seem to recall one of Dick Cheney's repeated comments during the election campaign as "Deficits don't matter". Well, according to some interesting articles on MSN.com today, Alan Greenspan disagrees. Greenspan was speaking to a banking group in Frankfurt and commented that "the United States should cut its record budget gap to help narrow the shortfall in its current account and avoid a need to offer higher rates of return to retain foreign investment and painful economic consequences."

The rest of this article is at http://www.msnbc.msn.com/id/6529487/ .

After Greenspan's comments, the stock market is down a bit, and value of the dollar slid down further. In an article related to that: "Economists are worried that at some point a declining dollar could mean foreign investors suddenly lose interest in holding dollar-denominated investments, and that could lead them to unload their investments in U.S. stocks and bonds, sending their prices plunging and U.S. interest rates soaring."

This article is at http://www.msnbc.msn.com/id/6519761/ .

What do you think of Mr. Greenspan? What do you think of this situation? Does information like this suggest that the U.S. is actually in a period of economic recovery? What's the Bush plan for dealing with the deficits? Is there a plan, or are they going to let us cruise along as if "deficits don't matter"?

5 Comments:

Blogger Snave said...

I'm not sure what to think of Mr. Greenspan, as I don't really have a handle on what the Federal Reserve actually does. I do think it's interesting that one guy has such power over interest rates, the way the stock market turns, and so many other economic matters.

I do know first-hand what it's like to operate with deficit spending. Our family has done it for years. We have finally gotten to a point where we can cut up some of the credit cards, and to where there is an end in sight to being in the red. It's a good feeling to know that we will get the problem licked. Other people I know have already achieved this, and they tell me life is so much better without all that credit card debt hanging over their heads. Of course our family has monthly matters such as groceries, car payments, a house payment, and bills for insurance and many other things... but our income is sufficient for dealing with those necessities.

Why should it be any different for our government? I think that "spending like there is no tomorrow" isn't the way anyone should go.

10:55 AM  
Blogger Jensun_Clemike said...

Snave, Greenspan has proven to be an economic genius (and wise ole fox) for many years. The mounting deficit will yield to hard economic times if allowed to continue. I'm not aware that Bush is concerned enough about it at this time to have a plan to deal with it. Right now he is up to his elbows in alligators.

1:27 PM  
Blogger Snave said...

How long has Greenspan been at it, anyway? When he speaks, people sure do listen! He definitely must be of genius caliber. If you're suggesting that Bush has other distractions that cause him to have trouble focusing on solving the deficit problem, I'd have to agree! Yikes...

1:52 PM  
Blogger J. Marquis said...

This is another one of those subjects that should have been stressed more in the presidential campaign. It's a little bit more relevant than whether Kerry threw medals or ribbons over a fence...

There are already serious consequences connected to the budget deficit. China sells us cheap goods, we send them dollars and then they loan the money back to us to use in the banking system. If the dollar goes too low they (and financiers in other countries) may decide to invest their money elsewhere and then we will really be in a heap of trouble.

We're already starting to kiss their ass. Colin Powell made a comment recently that implied we wouldn't necessarily get in the way if China and Taiwan went to blows.

5:20 PM  
Blogger Damien said...

Old G Dog (Greenspan) is correct,
The conspiracy nut in me thinks that the deficit had been actually let lose to punish european economies, visa vi stiffle the Euro and trade forays into the domestic economy. Unfortunately like all monsters the deficit essentually got a life of its own. The real conspiracy freak in me thinks this (hold your breath), that the deficit is actually being nurtured. It is in the interests for the Neo-cons to have a government leashed by lack of financial resources, ie 'social reform policys can't be implemented'. Maybe I'm wrong. No screw it I'm always right.

4:08 PM  

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