The Risk of Runaway Defecits

[Zoomie1980]

So these kinds of deficits are customary for recessions? Really, when was the last time our debt was 13% of our GDP?

Deficit spending has been happening in good times and in bad times.

In these bad times, even if the government's spending remained status quo, the deficit would grow because tax revenues will be down.

The question is: will any of this additional deficit spending actually recharge the economy to get it growing again?

Clearly throwing a trillion dollars at the banking community has helped them, but will they help the USA?

So far, the answer is no.

They're not lending to consumers at the rate they were because they are trying to pay off their TARP money so that they government gets out of their board rooms.

Additionally, I suspect they are not lending because they are fearful that the borrowers can repay their debts because unemployment is growing.

Given that 2/3s this economy is driven by consumers, and people are either not buying because they are broke or because they are afraid of losing their jobs, I do not think this depression is going away anytime soon.

In fact, I would not be surprised to see us go into another nose-dive as it becomes apparent that this stimulus plan is not working.

You think the economy would be the same as it is not without the bailout if they'd let the financial system collapse lase winter?

Just because the economy hasn't started growing yet doesn't mean it couldn't have been much worse.

It would have been brutal....but very short. Unemployment might have spiked to 15-17% or more. A lot of major banks would have failed but the end result would not have been any different than right now...where they still aren't lending. The big difference is, we would not be facing the yet to come inflationary spike as all this "stimulus" actually, finally hits the street, which will neuter any recovery to a trickle.

 

[Zoomie1980]

Reagan and the Bushes are responsible for 91% of the entire National Debt.

ReaganBushDebt.org

Under CBO forecasts, assuming a two term Obama presidency, Obama will own 73% of the overall national debt by the time he leaves office, dwarfing all who came before him.

 

[jreeves]

Reagan and the Bushes are responsible for 91% of the entire National Debt.

ReaganBushDebt.org

Under CBO forecasts, assuming a two term Obama presidency, Obama will own 73% of the overall national debt by the time he leaves office, dwarfing all who came before him.

Shh.....Chrissypants doesn't have spam to combat that.