by digby
There’s been a lot of good stuff on Paul Krugman’s blog over the past few days so if you haven’t checked in over there in a while try to do so this week-end. I’m particularly enjoying the idea that the brilliant hedge fund guys might have lost their shirts because their bets on the need for human suffering didn’t pay off. It reminds me of those end-of-the-world cults — which always just pick another day of doom the morning after their prediction turns out to have been BS.
But aside from that, Krugman posted something last week that I just want to post on this blog for posterity:
Bad news for Dr. Evil fans: the days of a ONE TRILLION DOLLAR deficit are over. In fact, the deficit is falling fast.
Some readers may recall the ridicule heaped on the people at the Center on Budget and Policy Priorities when they produced estimates suggesting that any notion of a debt/deficit crisis was all wrong. It’s turning out, however, that they were probably overestimating debt growth. The deficit is fading, and debt as a medium-term (meaning up to 10 years) issue has largely gone away.
This is not good news — or not unambiguously good news, at any rate. A deficit falling to probably less than 5 percent of GDP this year and well below that next year is MUCH TOO LOW for an economy whose private sector is still engaged in a vicious circle of deleveraging.
Oh, by the way, it is now 26 months since Bowles and Simpson predicted a US fiscal crisis within two years.
This is what comes of buying into a bogus consensus that deficits are the worlds greatest threats to human kind and that the pursuit of Grand Bargains based on projections too far in the future to have in meaning is a worthwhile way to spend vast amounts of political capital. So here we are, locked into more austerity while millions remain unemployed.
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