The CME Group’s Global Financial Leadership Conference held in Naples, Florida this week included several impressive speakers who analyzed markets and the economy in lieu of the credit crisis and efforts undertaken to deal with it.
While many issues were discussed and many points of view presented, there was an unmistakable common theme. That theme is that our current deficit spending and debt levels are unsustainable.
The word “unsustainable” had to be uttered at least two dozen times by various speakers at the two-day conference. While most of the speakers, which included former Federal Reserve officials, current global central bank leaders and a former Fed Chairman felt the emergency measures taken one year ago after the collapse of Lehman Brothers were necessary, they also seemed to intimate that we are on a road to ruin.
Perhaps that is true or perhaps that highlights the problem. The emergency at hand is always more important than long-term stability. It is easy to say we need to get tough, once the current crisis is dealt with. There always seems to be a new current crisis.
That is why the previous administration’s abandonment of pay-as-you-go budgeting was so disastrous. Yes the credit crisis would have forced Congress to abandon, at least temporarily, those rules but it could have been a one time charge. If basic budget discipline had not been abandoned, those fighting TARP (Troubled Asset Relief Program) would have had a stronger case and perhaps been able to work out better terms for the taxpayer.
How can Goldman Sachs be handing out multi-billion dollars in bonuses a year after accepting money from TARP? If this extraordinary intervention was absolutely necessary, why wouldn’t the terms be more advantageous to the entity saving the system?
If our current course is unsustainable, we need to change it now, not at some undetermined time in the future.
Tags: bailout, Congress, Federal Reserve, TARP
