Day By Day

Tuesday, May 12, 2009

Really Scary Stuff

Megan McArdle notes that Obama's spending and borrowing plans pose a far greater risk to the nation's financial health than is generally admitted. Specifically, there is a distinct possibility that the government will have to default on its debt. She writes:
For a while now, I've been asking people at conferences, on and off the record, what America's sovereign debt risk is? That is, how long until people stop treating treasuries as the "risk free" securities, and start demanding a premium for the risk that we might default.

The answer from the right has been a nervous (perhaps hopeful) 2-3 years. The answer from the left, and professional Democratic wonks, is some unspecified time in the future. Probably, there will be a Republican in charge.
Read it here.

In other words, economists and bond traders are in general agreement that Obama has set us on a course that will bankrupt the country, destroy the dollar, and inflict immeasurable hardship on the American people. The cynical calculation by political elites of both parties is contemptible. Republicans are hoping that the collapse will take place before the end of Obama's term of office so he and the Democrats can be blamed. Democrats hope that the collapse can be deferred until a Republican is President so he/she can be blamed. Both sides accept the inevitability or at least the high probability of collapse.

What is most contemptible is the fact that our national leadership has opted to pursue short-term political advantage at the risk of long-term economic hardship. This goes far beyond mere irresponsibility -- it is criminal.