American Needs Stimulus Not Virtue

The Obama administration’s insistence on fiscal rectitude is dictated not by financial necessity but by political considerations. The US is not in the position of Europe’s heavily indebted countries, which must pay hefty premiums over the price at which Germany can borrow. Interest rates on US government bonds have been falling and are near record lows, which means that financial markets anticipate deflation, not inflation.

President Barack Obama is under political pressure. Americans are deeply troubled by the accumulation of public debt. The Republican opposition has been extremely successful in blaming the crash of 2008 and the subsequent recession and high unemployment on government ineptitude.

When I look at Soros’ involvement in USA politics, I always have to look at motivation and the expected results of action. Soros is approaching 80 years old. Looking at his past efforts at taking advantage of declining economies, I can’t help but wonder is he sees the total collapse of the US economy as the pinnacle of his career.

He has supported every form of left wing, economically disastrous policy the Democrat Party has advanced. If you work on the assumption that he is, in fact, a brilliant speculator, and that he theoretically could use the collapse of the US economy to become the wealthiest man in the world, you can understand his pique at Obama’s professed turn towards fiscal responsibility.

Soros has invested hundreds of millions of dollars to gain control of the Democrat Party. Using his influence, he has advocated for the debilitating economic policies put in place by the Democrats. The total collapse of the US economy was guaranteed under these policies. Now he sees his potential victory over the financial system of the United States slipping through his grasp. Do not expect him to withdraw without a serious fight.

George Soro’s at FT link, You need a free account to read the whole article, but here are some highlights from it :
” The obvious solution is to distinguish between investments and current consumption, and increase the former while reducing the latter. But that seems politically untenable. Most Americans are convinced that government is incapable of managing investments aimed at improving the country’s physical and human capital.
Again, this belief is not without justification: a quarter-century of calling the government bad has resulted in bad government. But the argument that stimulus spending is inevitably wasted is patently false: the New Deal produced the Tennessee Valley Authority, the Triborough Bridge in New York and many other public utilities still in use today.
Moreover, the simple truth is that the private sector does not employ available resources. Mr Obama has in fact been very friendly to business, and corporations are operating profitably. But instead of investing, they are building up liquidity.
How much government debt is too much is an open question because tolerance for public debt is highly dependent on prevailing perception. The risk premium attached to the interest rate is the critical variable: once it starts rising, the existing rate of deficit financing becomes unsustainable. But the tipping point is reflexive and therefore indeterminate. ”

Soros thinks government is broken only because Republicans have told us it is ??? How about this for 'investments' George (the stimulus) ?

$15 billion for Pell grant scholarships (which make college more expensive), $1 billion for “community development block grants” (pork for cities), $145 billion for “making work pay” tax credits and $83 billion for the earned income tax credit (income transfers), $89 billion for Medicaid (more income transfers), $36 billion for unemployment benefits (ditto), $20 billion for food stamps (ditto), $30 billion for COBRA insurance extension (ditto), $79 billion for the State Fiscal Stabilization Fund (rewarding states that overspent at the expense of more frugal ones), $4.2 billion for “neighborhood stabilization activities” (we can only guess), and assorted special interest goodies like $400 million for global warming research, $150 million for “producers of livestock, honeybees, and farm-raised fish,” $335 million for the prevention of sexually transmitted diseases, and $55 million for the Historic Preservation Fund.

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