US gubmint shutdown + default + subprime sequel?

[Lemur]

Spending out of a recession doesn't help but it makes a nice band-aid while the economy heals.

Um, government spending is supposed to be a "band-aid while the economy heals." That's the whole concept. Government spending doesn't create long-term wealth; everybody knows that, or ought to. But when demand dries up, the only entity that can temporarily soften the blow is the guvmint.

Per ejemplo, the last jobs report was dismal. Not because the private sector didn't grow -- it did -- but because all of the states and counties are slashing their payroll as stimulus funds go bye-bye. This suggests that now is not the greatest of all possible times to dig into fiscal austerity.

I've said it before and I'll say it again: America has a short-term growth problem and a long-term debt problem. There's no reason why we can't address both in turn. Going gonzo in debt right now strikes me as counterproductive. Of course, if now is the only time we can address debt, then we'll do what we gotta do. I guess the combination of a recession and a Dem administration makes this the time to do it? Hmm.

I read somewhere that Germany has a sixteen-year plan to deal with restructuring its debt and deficits. Knowing the krauts, I expect they'll pull it off flawlessly. Calling for a balanced budget right now, on the other hand, strikes me as calling for another recession.

Cutting spending endangers the recovery. Significantly raising taxes endangers the recovery. Most economists would say that this is the time when you take a deep breath and deal with deficits until the economy is back on track. We'll see how this plays out, however Maybe our economy can handle constriction in the federal state and county guvmint budgets. Maybe. If so, then release the doves and put John Philip Sousa on the gramaphone.