Bernanke – the rising deficit crisis is the fault of the old folks.

During the last presidential election, Bernanke went to Congress to warn of a financial crisis which as we all found out was due to credit default swaps and unfettered improper bank activity, especially by AIG. Congress was convinced that a major bailout was needed to keep the “too big to fail” banks from collapsing under their own dead weight and taking the whole economy with it. The TARP came into being – a cover-up of how Goldman Sachs, Merrill Lynch, et al created a massive ponzi scheme which they sold to banks in other countries and which then provided them with “funny money” to bail out those foreign banks. It didn’t work of course and the world economy reeled on the verge of collapse. Some of that money bailed out/bought up auto companies; some went to Fannie Mae and Freddie Mac and some went to shore up mortgages for folks who couldn’t afford them in the first place. This is all old news right?

Today, Ben has changed his tune (just as the assault on the ObamaCare plan is about to begin in earnest). We have been plunged into crisis by the “aged and ageing.” Oh, and the rising costs of healthcare. Here

This is a story full of contradiction.

US government budget deficit, which rose sharply during the crisis, was “unsustainable”.

clip

This was because the underlying reasons for the deficit were not additional government expenditure during the crisis, but “the ageing of the population and rapidly rising healthcare costs”, he told the Congressional Committee on the Budget.

I wish all you old folk would return that Tarp money or the money the government keeps borrowing to keep you alive. Follow the old ways and die young.

However, he said government cutbacks needed to be long-term in nature, and that dramatic spending cuts now could jeopardise the economic recovery.

clip

He said it would take roughly 10 years to return to a sustainable unemployment rate of 5%-6% at current economic growth rates – in the final three months of last year the economy grew at an annualised rate of 3.2%.

So let me get this straight. People will either have temporary jobs or no jobs for ten years. Young people who are bearing the brunt of current unemployment figures may not be getting steady jobs for years to come, their lifetime earnings will be curtailed because of the fewer years they will spend in the workforce, and the ageing will still be costing the government more. Who is going to pay the taxes rises that will be needed to sustain the economy in the meantime? And if the deficit is going to be “unsustainable,” why the hell do we have to wait to introduce spending cuts?

However he said moderate growth and reluctance among employers to hire new staff meant “it will be several years before the unemployment rate has returned to more normal level”.

Are these the same employers who are going to be hit with higher costs for healthcare? The same employers who are trying to sell to people who have no jobs and/or little saving. The same employers who will be hit will tax increases, higher fees and more expensive production costs?

Bernanke is like Janus, the Roman two-headed god with faces looking (and in this case talking) in opposite directions, except that Bernanke has nothing good to offer the household.

Anyone have a different take on Ben’s latest offering to Congress?