Tuesday, March 14, 2006

Writing on the Wall

Here are few numbers Americans need to consider:

Trade deficit: $800+ Billion
Budget deficit: $400+ Billion
GWOT Expenses: $400+ Billion
(Global War on Terrorism)

So we are approaching around Trillion Dollars of Trade Deficit in a year or so if this trend continues and around Half Trillion Dollars of Budget Deficit and GWOT expenses. We know that Billion Dollars do not have much of significance in today’s economy. But does that mean Trillion Dollars do not matter? This is stretch.

Where this administration stands:
- lack of imaginative trade and economy policies,
- total resistance to any valid tax increase, and
- complete inability to control expenses;
there is no real hope that things will be turned around. This administration and their supporters will keep on touting employment numbers, but will forget about quality of jobs created, increasing gap between rich and poor and all the structural problems of American Economy. Add to this the easy money of home refinance will be gone and increased energy prices.

So what are we looking at here?
- Potentially dramatic interest rate increase sometime next year since the world will tire out giving credit to America and
- rapid deprecation of dollar.
Both these things may result in a recession.

The myopic policies of this administration means inevitability of Tax increases in next 2 to 3 years of time period. That will be bad since such Tax increase will not be done when it should have been in the first place when people have some money to pay.

What we are seeing is the collapse of the pet theory of this administration – ‘tax cuts will make America to grow out of recession’.

This is a ruse this administration is selling to America. NeoCons are coming back admitting foolishness of their Iraq War policy. Why not similarly this Administration is wrong about its Economic policy? It is wrong. Writing is on the wall.

Umesh Patil
San Jose, CA 95111
March 14, 2006.

No comments: