Obama’s big mortgage

The new President is busily mortgaging the country. I wonder if anyone told him the previous incumbent has been a bit heavy on the national credit cards and borrowing too, and he has to pick up the tab for all that as well.

The US Senate has shown there is still a vibrant democracy at work. The Republicans have been right to warn about too much public spending and borrowing, right to remind people that all the debt has to be repaid with interest. The economy will move ahead again when they have sorted out the money supply and got the banks operating more effectively. It does not take a massive spending splurge as well. They should concentrate on what has gone wrong.

They need to understand that the extra jobs need to come from the productive sector creating them to export to the rest of the world or to replace imports , to start to right the huge imbalances which have built up over the last decade. If you’ve been living beyond your means and are too much in debt, taking out another mortgage is not a great idea.

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  1. Brian Tomkinson
    Posted February 7, 2009 at 10:24 am | Permalink

    You are correct but is anyone in power listening?

    Reply: I think they are beginning to – and the Opposition did when they opposed the VAT cut and said we needed to cotnrol the deficit.The markets may make them listen more. Watch governemnt bond prices.

  2. Economic Voice
    Posted February 7, 2009 at 10:48 am | Permalink

    To pay off the old debt and afford the new, we may very well see the US following in the footsteps of Gideon Gono, the head of Zimbabwe’s Reserve Bank.

  3. Acorn
    Posted February 7, 2009 at 10:54 am | Permalink

    “The US Senate has shown there is still a vibrant democracy at work”. Would this be a good time to suggest electing our Executive separately from our Parliament (the Legislature). I don’t think I have mentioned this before. The democracy that happens in the US Senate and House of Representatives, does not happen in the UK.

    BTW. JR, fancy a trip to Dubai, if we hang around the airport car park; I reckon we could pick-up a couple of Jag XFs if we play it cool!


  4. marksany
    Posted February 7, 2009 at 11:00 am | Permalink

    It’s a pity the republican senators weren’t telling their own president the same thing for the last 8 years, isn’t it?

    • APL
      Posted February 7, 2009 at 5:46 pm | Permalink

      Marksany: “It’s a pity the republican senators …”

      My thoughts precisely.

      The fact is, the credit bubble was not just a financial phenomena it is a social phenomena too. So many who should have, indeed were paid to keep a check on government spending, didn’t.

      By the way, isn’t this the ‘flower power’ generation in charge just now?

      In the UK, the same. Corruption and graft.

  5. Gannet
    Posted February 7, 2009 at 11:14 am | Permalink

    For those of us Beyond The Pale, call us The Cynical Tendency or something, who have been suggesting for a little time that economic and financial things were all too likely to go wrong, the situation does not seem to be improving. One issue in the USA is really understanding what is happening on Main Street, and away from Washington DC Beltway and New York, Wall Street. The figures are grim and getting grimmer by the week. Borrowing more and consuming more are not the answers. In the UK it is all too similar, only in this case we are talking about inside the M25 in the South and the Old Town in Scotland. Neither the USA nor the UK have understood what might be the shape of The Economy That Is To Be. So who will emerge to explain the consequences? Will it be a Jack Dash figure, or might it be a Jack Cade? Blow the economics, go to William Shakespeare, “King Henry VI – Part 2”

  6. Tony Makara
    Posted February 7, 2009 at 11:29 am | Permalink

    A voice crying in the wilderness for years in the states has been Pat Buchanan, who warned long ago that America’s expensive foreign wars, trade deficits and the property boom would eventually destroy the US and world economies. Sadly no-one listened to Mr Buchanan, a man whose predictions have been completely vindicated. Pat Buchanan also opposed the bail-out, and continues to be a voice for traditional patriotic Conservatism in opposition to the internationalist free-trade mantra of the Neo-Cons and of course the Democrats. Those who consider themselves to be true Conservatives should bookmark Mr Buchanan’s website and visit regularly for sober analysis of the US political scene.


  7. Doug
    Posted February 7, 2009 at 2:06 pm | Permalink

    It’s also fair to say that it is the same GOP guys in the Senate were the ones using a rubber stamp to allow Bush’s spending. After all Congress holds the purse strings. I’m absolutely sure they haven’t rediscovered fiscal conservatism in such a short time. This is pure politics, trying to remain in the media spotlight, trying to generate movement in the polls and not for one minute thinking of the long term good of the US.

  8. Bridge
    Posted February 9, 2009 at 4:15 am | Permalink

    New guy comes in, pushes public spending through the roof and then tries to stealth tax his way out of the mess a few years later, before leading the country into eventual economic collapse just in time to hand over to the next mug. Did he play ‘Things can only get better,” at his inauguration?

  9. Save money on your mortgage!
    Posted February 18, 2009 at 8:35 pm | Permalink

    Very very very interesting,i will definitely have to bookmark this page….just such great stuff you bring up…there is always more to learn.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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