Obama Gets It Wrong

There’s not much to say. In an interview with Fox today Obama warns us all about the threat of a double dip recession. So far so good. I agree. The cause? Too much debt and the subsequent possible loss of confidence in the bond markets that could trigger the need for higher US interest rates.

Oh my.

What a load of rubbish.

Let’s all hope he had his fingers crossed. Or that he was playing the crowd in advance of the health care debate in the Senate, where the good news is that the health care reform bill being presented by the Democratic leadership has been evaluated by the Congressional Budget Office as a big money saver.

So perhaps Obama was just saying: a vote for health care reform is a vote for fiscal conservatism. Let’s hope.

Because if he meant that statement as a stand alone comment on the economy, he may well have just blocked any hope we have of using the only weapons we have against a further decline.

He suddenly turned all Hoover on us.

That, in a word, is catastrophe.

Why on earth would he have chosen now to point the finger at our rising debt levels? They are still manageable. They are high, much higher than most of us would want, but they are within the reasonable bounds. I repeat what I have said here many times: this is an extraordinary moment in our economic history. There are bound to be odd things going on. The banks gave us a mighty heave and tried to trash our economy in their pursuit of profits. They failed to destroy us mainly because we have learned the lessons taught by the Great Depression.

Except it sounds very much as if Obama hasn’t learned those lessons.

I suppose I could be generous and argue his message was for the Chinese: they stand to lose a lot if the world’s bond market trashes the US. So he needs to show everyone he cares about the deficit.

The problem is that by siding with the deficit hawks he eliminates our ability to get more stimulus if we need it. He puts the emerging jobs creation legislation at risk. In short he plays right into the hands of the ideologues who would love to see us fade rather than grow.

Maybe he was misquoted – this was Fox after all – but his comments have already been splashed about the European press, so I doubt that.

So it looks as if he made a gaffe.

Possibly a fatal one for our economy.

This was a truly horrible statement is he really means it.

Hold tight, because the captain just lost control of the ship.