Obama Laying Foundation for Growth
Like most politicians President Obama is short-sighted in determining his accomplishments. He must have been listening to Larry Summers as he doesn’t sound as pessimistic as he had in the last few weeks. He has even begun to speak confidently of an economic turnaround and even pointed to those early signs.
What I’m not certain about is how 50+ days in they (Obama’s economic team) are seeing signs things are improving. Yet his budget and stimulus has not taken effect yet. He continues to whine about the “inheritance” that he received from the Bush administration. So is the slight economic recovery due to the “inheritance” as well?
Obama, speaking with reporters at the White House, said that the days of overheated housing markets and maxed-out credit cards are over. “We are laying a foundation for what I’m calling a post-bubble economic growth” that won’t repeat the risks that led to the current crisis, he said.
What might we call the 4 trillion debt and trillion dollar deficit that future generations are going to “inherit” from Obama? The debt bubble? Will it ever pop? Maybe. Because China is already getting a tad nervous lending us money. If that pool of cash dries up we will have some problems. Granted they need us happily spending as much as we need them giving us cash. But having the remiere of China, Wen Jiabao, express concern over the U.S. economy and the value of his nation’s vast holdings in U.S. Treasury bonds has to be at the least embarrassing.
“Of course, we are concerned about the safety of our assets,” he told reporters in Beijing. He suggested overspending by the U.S. would drive down the dollar and depress the value of China’s holdings.
We are still the big economy engine of the world. Our debt is considered the safest in the world. But it seems less secure for our country to be beholding to China for our economic stability and also rely on the Middle East for our fuel. Imagine a world where India and China actually grew their middle class to the size of ours. Imagine if they stopped saving every dime they make. What would happen if China stopped allowing us to borrow money from them? Maybe The Middle East decided not to allow us to buy as much oil from them as they have better customers in Asia. We would be screwed. It won’t happen. Probably not in our lifetime. But if we don’t stop borrowing from our future and stop depending on Middle East oil we will lose control of our destiny.
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