I am a little confused by all this budget talk coming out of Washington. OK, I’m a lot confused. So I’ll assume some of my readers must also be bemused — I mean confused.
The US debt ceiling will be raised. You can count on that.
Without this move, the US will default on its debt obligations and our creditors will be very angry. Those creditors include your Aunt Mildred, who holds US Savings Bonds; Uncle Fred, who is owed a pension from his days as a CIA undercover operative; and the entire nation of China, which owns more US debt than anyone else.
That much I understand.
That’s why the Republicans and Democrats will eventually cut some sort of deal that makes it look like the US budget deficit will get better in the future. I say “makes it look like” it will get better because nobody right now can predict when the US economy will resume a more normal growth pattern (a good thing because it will increase income tax revenue).
No one really knows when interest rates will climb (a very bad thing for anyone, including the US, that needs to borrow new money and roll over existing debt). Up to this point I still follow what’s going on.
But here’s where my understanding ends. How exactly are raising the debt ceiling and pretending to cut the nation’s federal deficit going to cure our biggest problem: the lack of jobs?
Until we create jobs, the economy isn’t going to grow enough to make any of the budget and debt-ceiling predictions come true.
President Obama once naively thought there were really things called “shovel-ready jobs.”
He’s now seen the error of his ways on that issue. But now he believes that jobs will be created because companies will suddenly feel better once Congress and the president come to some sort of a budget and debt deal.
This might stop companies from firing more people. But why would this create jobs?
Are corporate executives going to suddenly feel better because our elected officials — who, along with Wall Street, are largely responsible for our country’s predicament — stopped the US just short of the cliff?
The president’s own job is now ready for the shovel: he’s digging a very big hole and putting both his career and his legacy into it.
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Ben Bernanke oughtta watch how he explains things.
Answering a question yesterday from a senator after he addressed Congress, the Federal Reserve chairman explained that Social Security’s problems have to do with too many Americans collecting money and too few people working and paying into the retirement system.
It’s a demographic shift that critics — including me — have been bringing up for years.
But then Bernanke blurted out that this imbalance was bound to happen when Social Security’s “pyramid” structure becomes too bottom-heavy — too many people collecting.
Mr. Bernanke, you are describing a typical pyramid scheme. A Ponzi scheme — just like Bernie Madoff pulled. And while this is an open secret about Social Security, you shouldn’t be using the world “pyramid” in front of the kids.
Bernanke also said yesterday that he was standing by in case the economy needed help. But with what? Quantitative Easings 1 & 2 may have helped the stock market, but they’ve been complete duds in helping the economy.
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Congratulation to Rick Santelli, the bond-market guy on CNBC.
Yesterday he finally brought up the fact that America’s job growth is being artificially boosted by the birth/death model, which I’ve been writing about for years.
That’s when the Labor Department’s computers — without proof — add jobs to the monthly count that should be created by new companies.
These aren’t real jobs, Santelli explained to his confused colleagues. They are being created by a “formula.”
Now if Rick passes the word on to all the clueless “experts” on that station, the world would have a better knowledge of what’s really going on in the job market.
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Keep a close eye on the government’s Consumer Price Index when it is released on Friday.
The experts expect a slight decline in infla tion of 0.1 percent. But as I’ve been tell ing readers, the CPI could jump this month or next be cause seasonal ad justments last spring made inflation look too tame. So the index needs to play catch-up.
The only thing that could save the CPI is the fact that energy prices did decline temporarily after the International Energy Agency and the US tapped strategic petroleum reserves last month. john.crudele@nypost.com