The audacity of soaring debt
One reason why the stock market is nose-diving, says economist and foreign policy expert Phil Levy, is that investors are realising that Obamanomics could bankrupt the United States.
The idea of a U.S. government default has recently gone from “unthinkable” to close to 10 percent over the next five years.
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[T]he United States has serious long-term fiscal challenges, between the downturn, an aging population, and major entitlement programs. None of the options for getting out of the mess looked particularly palatable. And that was before the president spoke of an extra trillion dollars for health care.Despite claims of a new realism, the administration’s budget is loaded with optimism. It assumes the economy will have a quicker and more vigorous recovery than most private forecasters predict. It assumes that individuals won’t change their behavior much to avoid new, higher tax rates. It assumes that sacred cows such as mortgage interest deductibility and agricultural subsidies are ready to be made into hamburgers. And even with all this optimism, the administration predicts red ink as far as the eye can see.
Meanwhile the administration is trying to pretend the crises in the financial and housing sectors will go away on their own.
Some economists are predicting that a large portion of the American housing market will never recover.
h/t: Andrew Bolt