OR: the Upside and Downside of Deficit Spending
The Current Accounts shortfall of $144 billion (that for January through March) is a reminder of how the government (pick a devil there) has expanded business by pumping cash into an economy on the verge of overload in terms of being propped up on borrowed time. This occurs when Presidents run for re-election almost every 4 years and a tip in the stock market to the negative would most certainly bring defeat in the fall. But someday the deficit (currently approaching $8 Trillion) is going to become the 800 pound gorilla that will doom all we stand for in the United States.
The Stock Market actually likes to some extent the idea of expansionism during war or terrorist elimination or whatever you want to call 9/11/2001 until now. Businesses can count on government looking the other way to business malpractices as long as money can be made and the troops are supplied. It was outrageous that we spent $1500 for toilet seats in the early 90's but no one is complaining now. Halliburton is accused of illegal contractual practices, but as long as Mr. Cheney can tell Senators to F*** off I don't think they need worry. (Dick Cheney was the head of Halliburton before becoming VP). Boeing has been subtlely quiet making money on suppling parts for aircraft that many think are even more of a problem than that. Boeing has more than doubled in price from March 2003 until now (isn't that convenient?!).
But the grim reaper for the economy is outside of the door and the deficit credit card will need to be repaid. Mr. Greenspan, who will try to work his credit magic to try to restrain the goblins of higher interest rates ("a leisurely pace." he says) but the truth is that we have fueled the economy on false pretenses and like the credit addicts we have become, business will eventually have to pay for the drunken stupor to follow.
The problem has really become that no one wants to listen to the doorbell. The collectors are there and we are yelling out that no one is home. It doesn't work in your home and for the U.S. it won't work either. The cost of being the world's only superpower has skyrocketed towards the point that future generations 50 and 60 years from now will be paying for "George Bush's Global Adventure."
The stock market wants it to continue. Profits are approaching record levels. Money is loose, the economy is growing faster than ever before.
I hope your great-grandchildren don't mind paying the price...