Saturday, January 20, 2007

Ben Bernanke is a Party Pooper

Well, the Democrats are now in charge of the national wallet and everyone's getting a raise in their allowance. Higher minimum wage! Health care for all! More money for education! Ponies for all the children! Lots and lots of ponies!

It's all going to be free.

Until we get the credit card bill and we all have to flee to Ecuador to escape our creditors. Ecuador may be nice, but I don't think it can handle all 250,000,000 of us.

Nancy Pelosi's party has just begun and Federal Reserve Chairman Ben Bernanke is pooping all over it. There's poop in the punch bowl, on the appetizers, on the drapes, on the sofa and in the sink. The Wall Street Journal's got the goods on this Scrooge in a suit. (Subscription may be required.) Here's a bit of what that tightwad had to say.

Federal Reserve Chairman Ben Bernanke warned that rising health-care and Social Security spending could create a "vicious cycle" of rising debt and interest payments and an eventual fiscal crisis.

While breaking no new ground, Mr. Bernanke's testimony was notable for its emphasis on the consequences of a rising national debt -- the sum of all annual budget deficits -- rather than the annual deficit alone. The debt, he noted, would reach almost 100% of GDP by 2030 according to the Congressional Budget Office, a level previously reached only during World War II. The annual interest on that debt would be 4.6% of GDP, triple the current level.

"A vicious cycle may develop in which large deficits lead to rapid growth in debt and interest payments, which in turn adds to subsequent deficits," he said. Similar "debt spirals" have contributed to financial crises in other countries, a subject Mr. Bernanke studied as an academic. "Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both," he said.
Don't think for a second that the Democrats represent any kind of change. That debt didn't make itself. The Republicans have been spraying a firehose of money at the country for the last 6 years. Luckily for all of the drunks at the party, the liquor's still flowing.

Despite senators' praise, it is unclear whether his advice will have much direct impact.
Yay! Carpe diem! Let's all get hammered tonight! Tomorrow may never come at all.


Scribbit said...

I'm a Republican, born and bred, but I shed no tears at the turnover in Congress--they were spending way too much money for my tastes and at least with two competing parties gridlock means less spending. I'm always an optimist you see :)

Kelly the little black dog said...

I agree witrh scribbit and so does most of the investment community. A split government is one that tends to maintain things the way they are. Business seems to prefer government that doesn't do too much.