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The honeymoon may be over
Other countries and more Americans are starting to question whether Team Obama is on the right path. European countries are sick of all the US stimulus spending. China has concerns too.
Here’s what the French finance minister said:
“The United States is insisting on the need for a strong, rapid and coordinated stimulus. Why? Because they were the last ones to put in place their plan and they are facing a bigger crisis. For most of the countries in continental Europe, the urgency is to develop the rules, highlight discipline and sanctions through a new architecture of the financial system.”
Japan and China say they’re both ready to do their own stimulus spending. But today, Chinese Premier Wen Jiabao said he was worried about how much the mounting US deficit. From Associated Press:
Washington is counting on China to continue buying Treasuries to fund its $787 billion stimulus package…. “They are worried about forever-rising deficits, which may devalue Treasuries by pushing interest rates higher,” said JP Morgan economist Frank Gong. “Inside China there has been a lot of debate about whether they should continue to buy Treasuries.”
If China stops buying them or cuts back significantly, there goes the value of the dollar. Hello inflation.
There also may be growing concern in this country about what the Obama administration is up to. A Wall Street Journal column says it’s wrong to focus on the President’s high popularity numbers, because when you drill down, you find many people are squirming:
“There is also a clear sense in the polling that taxes will increase for all Americans because of the stimulus, notwithstanding what the president has said about taxes going down for 95% of Americans. Close to three-quarters expect that government spending will grow under this administration.”
I’d say Americans are trying to remain cautiously optimistic in general. But the prospect of even bigger deficits as far as the eye can see shouldn’t sit well with anyone, and Europe and China are right to call us on it.