The Corner

U.S. Rescue Efforts May Risk Double-dip Recession . . .

Kathryn, there’s another sense in which that might be true. When bond investors have relaxed enough to be able to contemplate something other than the ’safety’ of treasuries, they will start to wonder how all this spending is going to be paid for. And when they do, they are very likely going to demand a higher return from the money they lend out to Uncle Sam. In other words yields will rise — the last thing any nascent recovery will need.

 

Don’t get me wrong. I thought, and think, that some sort of demand-push stimulus was a good idea. Ratcheting up the permanent cost of government in the way envisaged by the Obama-Reid-Pelosi version of stimulus is, however, something else altogether. And it’s something that could indeed prove to be counter-productive.

 

And that’s before we throw the president’s new budget proposals into the mix . . .

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