Obama adds pep to US economy – MoneyWeek

Whatthecommentatorssaid

ThispackagehasarealisticshotatpassingCongress,asJamesPethokoukispointedoutonBreakingviews。

com。

Anditshouldgivetheflaccideconomysomepep。

Analystssayitamountsto$300bnoffreshstimulus–around2%ofGDP,or40%ofthesizeofthefirstpackagelastyear。

MichaelFeroliofJPMorgannowseesscopeforGDPtoexpandby3。

5%nextyearinsteadof3%。

CapitalEconomicsthinksitwouldadd0。

8%toitscurrentforecastof2%。

Butwhilethepackagewillinjectgrowthintheshortterm,itjustmakesthedeficitproblemworse。

Nowonderyieldsrose–ifthegovernmentgoesforproposalsthatcouldaddaround$750bntoourpublicdebt,thefixed-incomemarketisnotexactlygoingtolikeit,notedDavidRosenbergofGluskinSheff。

Thedeficitnextyearisnowlikelytobe9。

5%ratherthan8。

5%,accordingtoBricklinDwyerofBNPParibas。

Deficitsareexpectedforthenexttenyears。

Overallpublicdebtisover80%ofGDP。

Costsarespirallingasthepopulationages。

Unfortunately,Congresshashithertoprovedunwillingtoaddressthehugegapbetweenthepeoplesexpectationsofgovernmentservicesandtheirwillingnesstopayforthem,asLexputitintheFT。

ThemarketmaynowbetakingonboardthefactthattheUShasamassivefederaldebtproblem,whichithasnointentionofdoinganythingabout,saidMarcOstwaldofMonumentSecurities。

TheUShasalwaysbeenseenassafehaven,whilethedollarsstatusastheworldsreservecurrencyhasalsounderpinnedconfidenceinitsdebt。

ButeventheUScantstretchthemarketspatienceforever。

Notdealingwithrealitywilleventuallycreateaveryviciousresponse,saidJohnMauldinonInvestorsinsight。

com。

AskGreece。

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