The Deficit Is Shrinking

You read that headline right. And the source of this surprising reality? Drudge Peach Pundit Morning Reads.

If you click through and read the article, you'll see the CBO projects the 2012 deficit at $1.08 trillion. Originally the estimate had it dropping below the tantalizing trillion mark, but later revisions nudged it slightly back over that psychological marker.

Can that be right? Can the deficit actually be dropping despite the best efforts of our free wheelin' Socialist-In Chief?

Yes. And it has for some time.

Here's the deficits since 2009 (and remember 2009 was actually mostly President Bush since the fiscal year ran through Oct 1st):

2009: $1.41 trillion
2010: $1.23 trillion
2011: $1.29 trillion
2012: $1.10 trillion

Source: http://www.usgovernmentdebt.us/federal_deficit_chart.html

And that chart at the top? That's the rate of increase in Federal spending. That nose dive at the end is not an illusion.

Just a few things to roll around your head in case you have the misfortune of your radio landing on the WSB MEDIA CONVEYOR BELT OF DOOM with some snake oil salesman screaming "HE'S GOING TO SPEND US INTO OBLIVION!"

Reality bites.

Tweet Of The Day

In response to Poltico's Mike Allen tweeting that Warren Buffet buying his hometown newspaper is a "great day for publishing", the AJC's Kyle Wingfield tweets:

I'm sure it would also be a "great day for publishing" if a Koch bought a paper.

In the rapidly closing circular world of "Republican thought", Warren Buffet = George Soros.

All because he uttered the heresy that we may be on the left side of the Laffer Curve.

Crashing The Blame Game

When the entire global economy comes within inches of collapse, you can be sure there will be plenty of finger pointing. The direction of the pointed finger generally depended on your preconceived political point of view.

Listen to the Limbaugh/Hannity/Axis every day? Then you probably think it was the government forcing banks to loan to irresponsible people. Read Daily Kos on a regular basis? Then, it's all about unregulated greed with Wall Street running wild. If you're the Tea Party.....well, it's probably a weird mix of both, but really, you're just pissed about government money heading in six different directions and none of them yours.

I will admit that I've struggle to make sense of it all, but there's one thing that never seemed to jibe with reality.. Sure there were irresponsible loans and irresponsible borrowers and I'm sure Fannie Mae had its part to play, but how does Dudley Downbeat down the street taking a second mortgage to buy a boat result in global economic armageddon?

Based on one emailer to Andrew Sullivan, Dudley Downbeat had his role in the play but he was a walk-on showing up briefly while other larger players convinced the audience the show must go on.

Wall Street firms were regularly leveraged 30:1...the scale of the bubble to be increased by orders of magnitude - the equivalent of having 50 homes in a fire-prone neighborhood, but with 100 insurance policies on each and a lively market of bets on which will burn down first.  If this were just a sub-prime housing crash, it would have hurt (think dot-com crash), but it wouldn't have brought the global financial system to its knees.  That required Wall Street and AIG, with the ratings agencies helping along the way (by convincing institutional investors that all was safe).

The burning house analogy is the best one I've heard yet.

The analysis of what happened isn't finished (few have yet written about the hidden bank run that annihilated things like mutual funds) and will probably go on for the next decade. But it's clear there's plenty of blame to spread around, but it ain't going to spread like peanut butter. Some deserve some chunks.