The Chinese laugh at Geithner - but the joke is on US Taxpayers. Goodbye, America!

"It's never a good sign when you want to borrow money and your potential lender laughs in your face. But that's exactly what happened to U.S. Treasury Secretary Tim Geithner on his recent trip to China. What prompted the laughter? His remarks during a speech at Beijing University, in which he told the audience, apparently intending to reassure them about their investments in U.S. Treasuries, 'Chinese assets are very safe.' ...

Equally risible were these comments from Geithner shortly before departing for China: 'No one is going to be more concerned about future deficits than we are,' he told reporters as he prepared for two days of talks with concerned Chinese finance officials. Obviously, he was showing off his comedic chops, since even that line was delivered deadpan. He also insisted the U.S. is 'committed to a strong dollar' -- not exactly apparent when you look at the U.S. budget. ...

China's finance officials, many of them educated at the best U.S. business schools, can do the math. And it isn't very pretty. Next year, the U.S. runs a deficit of $1.8 trillion -- or nearly 13% of GDP. Last year's deficit was $455 billion. The deficits will slowly come down from that $1.8 trillion, but not by much, according to the White House's own forecasts. Geithner says he hopes to slash the deficit as a share of GDP from 13% to 3% by the end of the decade. But those projections of declining deficits depend highly on the rosy scenario cooked up by the White House for the economy.

They expect the economy, for instance, to expand 3.5% next year, 4.4% in 2011, 4.6% in 2012 and 3.8% in 2013. They might be right, but if they are, they'll be in the minority. Virtually no private sector forecaster expects the economy to grow that fast. Over the next 10 years, the U.S. will rack up another $9 trillion in deficit spending -- money that will have to be borrowed from someone -- perhaps the Chinese, or maybe strapped and overtaxed U.S. consumers.

Another $1.1 trillion is planned as a possible down payment on nationalized health care. Add to that the $2 trillion at least that the Federal Reserve is spending, and government is on the hook for close to $13 trillion. Given that the White House has built into its projections just $989 billion in added taxes, its clear the deficits will get big and stay that way for years. One trip to China by our top bond salesman may not be enough." --Investor's Business Daily


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