The economy will contract in a few years. It always does. But instead of paying down the government debt when the economy is decent we are running record deficits. That will leave the government in a position where a stimulus will be impossible to employ. We could end up like Greece or Portugal, especially if we embark on a huge debt funded infrastructure or war spending spree in the next year or two.

So when the contraction comes and revenue to the government falls even more are the mega-corporations that are pocketing the current tax break going to step up and increase their spending to stimulate the economy? Anyone think that is going to happen? 

Or is the government going to be forced to slash spending at the same time that private investment is slashing its spending, thus causing a depresion that is far worse than what preceded WWII.

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...

Under 2.5 growth with near full employment and a $2.5 trillion spending stimulus and that is right now. Any contraction and this stuff goes exponentially in the wrong direction. Ever wonder why so many Republicans are jumping ship when they control the whole show? Think about it.

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I was right.

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Dora Hates You

... I heard that pillar of moral righteousness, Newt Gingrich, gush on and on about 2Q growth at 4.5%.

We aren't out of May yet and he's talking like it is a slam-dunk.

Let's hope he's right. We will need something serious to slow the economic drag of increasing fuel costs and increasing interest rates.



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I was right.