Up or Down?

There was some encouraging news this week: Citigroup reported that it had turned a profit.  Yes, they receved billions in bailout money, but it’s still encouraging.  And the Dow Jones average was up for the week, for the second straight week.

Has the market found its bottom?  In another time, the answer might be ‘yes:’  we would reasonably expect the market to take its time to recover, for the parties to take their losses and lick their wounds, and then forge on.

But yesterday, the Congressional Budget Office quantified ‘trillion-dollar deficits as far as the eye can see’ to anticipate a cumulative deficit of $9.3T over the next ten years.

Who will pay for it?

For years, our deficits have been funded from overseas: from China and Saudi Arabia.  But they’re beginning to get worried.  Our own economy is now so oriented toward credit and consumption that we can’t finance it ourselves.

The only plausible alternative is inflation: the government watering down the money to make it go farther.

And the deficits aren’t just to fix the economy: they’re also for President Obama’s programs to remake the country in his own image.

And so what could have been the bottom almost certainly won’t be.

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