The Big Fat Budget Deficit. Yawn. (NYT)

[CShine]

Democrats grouse that President Bush has recklessly frittered away the surpluses of the 1990's. Foreign finance ministers plan to express their alarm about America's Brobdingnagian budget deficit at a Group of 7 meeting in Boca Raton, Fla., this weekend. Even a growing number of Republicans argue that Mr. Bush needs to stop making excuses and cut government spending.

So what is the reaction from the bond market vigilantes, those disciplinarians who bid up interest rates whenever past deficits started looming? Yawn.

Since Mr. Bush released his budget proposal on Monday, forecasting a $521 billion shortfall for the current fiscal year, the interest rate on 10-year Treasury notes has actually fallen slightly, closing on Friday at 4.08 percent. Since August, when the deficit estimate was $475 billion, the rate has dropped from about 4.4 percent. The bond market, it seems, has stopped worrying and learned to love the deficit. The question, of course, is whether everybody else can relax, too.

There are some basic economic reasons for low rates, like an influx of foreign capital and the unevenness of the American economy, that have little to do with the deficit. But there also appear to be psychological reasons. Many economists say the bond vigilantes' muted reaction is both a symbol and a cause of the misplaced calm about the deficits, at least outside the Washington hothouse.

http://www.nytimes.com/2004/02/08/business/yourmoney/08big.html

[w4rma]

1. Folks talk about social security and medicare, but our we won't be able to

keep our military solvent either if we don't quit bankrupting our country and rediverting resources out of our country.

[ayeshahaqqiqa]

2. Rich capitalists have nothing to worry about

they have their huge tax cuts to cushion any economic downturn. Instead of talking with bond brokers, talk with factory workers and middle class workers who have lost their jobs and are fast losing unemployment benefits. Remember, please, that the Great Depression started in the twenties with an agricultural depression-things were going bad in the country long before that day in October 1929 when the stock market crashed. That will be the last thing that happens-but by then the rich fat cats will be sailing away to the Cayman Islands or other tax havens, saying "So long, suckers!" to the rest of us.

[ramapo]

3. Bond traders need debt

Without debt bond traders would have nothing to trade. The more debt, the more bonds to sell. Sales equal profits.

Taxpayer money goes to pay bond holders interest. Many, perhaps most, bond holders are fairly affluent. So you're tax dollars get redistributed to the wealthier.

The only bright spot is that rates are low. Perhaps artifically low. So it's not as expensive as it was to service new debt. At some point that will change.

[Fargin Ice Hole]

4. Touch my Monkey!!!!! Touch him NOW!!!!!!!!!!

<http://www.uwsa.com/uwsa-usdebt.html>