Faith Healing the Economy: The curative power of very important speeches
Today's Financial News - Posted January 19, 2009
Sermons and speeches can move people. But thank God for eurozone deficits!
by J. Christoph Amberger
Baltimore—(TFN): On any given winter weekend, downtown Baltimore is a somewhat lifeless affair. If we had tumbleweeds blow down Pratt Street, you’d mistake the place for a ghost town. If it weren’t so cold.
But last Saturday was different.
There were crowds milling at the War Memorial as the City of Baltimore enjoyed a pre-Presidential visit. Our mayor—indicted for theft, corruption, prejury and various other crimes and misdemeanors—was present, albeit conspicuously absent in the list of government and party bigwigs acknowledged by the guest of honor.
I missed the speech of the country’s new CEO as I was skiing up in Pennsylvania with my sons’ Boy Scout troop. But I understand the words hope and change were mentioned. People were so excited that when I drove into work this morning, I expected piles of discarded crutches and wheelchairs to line the streets and packs of suddenly masterless guide dogs howling at the gently falling snow.
Alas, the lame were still lame, sight remained unrestored to the blind, the Ravens won’t go to the Super Bowl… only the government had a day off.
Which is a somewhat appropriate portent of things to come. The curative power of important speeches is an iffy thing. Thus far, it hasn’t had any noticeable effect on the U.S. economy, either.
Luckily, the saving grace of the current situation is that this is a global problem. Other countries are no longer quite as able to cash in on American weakness as they were just six months ago. And the ancient liberal dream of pricing American labor out of global competitiveness is taking second place to the concern of keeping any kind of labor in America.
Even the pillar of America’s credit-worthiness, the strength of the U.S. dollar, no longer appears quite as worm-eaten if you compare it to its major competitors:
While dollar bears rightfully fret about the mammoth budget deficits we can expend from the Obama Administration, the eurozone countries, too, have no other choice but to compensate for lagging economic growth and shortfalls in government income by boosting borrowing and spending.
In fact, almost half of eurozone members will come in above the EU’s Maastricht deficit limits, with budget shortfalls greater than 3% of GDP.
This would boost the overall eurozone budget deficit to 4% of GDP—the highest since the euro zone was created. And to 4.4% in 2010.
Government debt in the euro zone would jump to 72.7% of GDP in 2009, from 68.7% last year.
We may worry about leaving an insurmountable mountain of debt to our children. Since large swatches of Europe don’t count high birthrates among their problems, I wonder who will be paying off the long-term debt run up by the European nations…
For tomorrow, expect half-hearted trading with a slightly bullish twist as oil prices dip toward $33 per barrel.
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