Thursday, May 06, 2004

Now Greenspan starts to get worried? Where they hell was he during the last three years??
The head of the Federal Reserve voiced a note of concern today about the effects of America's soaring national budget deficit on the country's long-term economic stability.

"We in the United States have been incurring ever larger deficits," the Fed chairman, Alan Greenspan, said. He added that "we have lurched" from a budget surplus in 2000 to a deficit that is projected by the Congressional Budget Office to amount to 4.25 percent of gross domestic product this year, or about $500 billion.

The "yawning" budget deficit, he told a banking conference, was a bigger concern to him than the equally growing trade deficit or high household debt.

"Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances," Mr. Greenspan said.
It wasn't too long ago that Greenspan was playing the co-dependent enabler to Bush's dramatically ballooning budget deficits driven primarily by tax cuts. Now apparently the guy has seen the light -- especially after he suggested last month that cutting Social Security was the best way to tackle the problem.

But what about the High Priest's claim that the budget deficit -- around 5% of GDP -- is of concern but the current account deficit -- also around 5% of GDP -- is not? Because apparently the former is "not readily subject to correction by market forces" while the latter is. Huh?? Has Greenspan been paying any attention at all to the massive subsidization of the US dollar and US interest rates this past year by the Chinese and Japanese central banks (last time I checked, central banks were parts of governments)? Where exactly are the "market forces" correcting the ever-swelling US current account deficit? Oh, right, they're out there and they'll get us "eventually". I like Althusser's "in the last instance" a lot better.

Read the article: it's a broadside on Social Security disguised as concern over the deficit. This guy is a one-man weapon of mass destruction and must be decommissioned as soon as possible.

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