Sunday, September 16, 2007

What Bush and Sarkozy REALLY have in common: the DEFICIT!

You may have read the comments over Greenspan’s criticism of the Bush-Cheney’s abandonment (along with the Republican-controlled Congress) of their party’s principles on spending and deficits. in his memoir to be published tomorrow.

“They swapped principle for power. They ended up with neither. They deserved to lose” in the 2006 election, when they lost control of both the House and Senate. (NYTimes)

This is obviously a major embarrassment for the White House even if Greenspan’s economic authority may be somewhat undermined by the current bust of the housing bubble fueled by low interest rates and risky mortgages over the past six years and by his own admission, he failed to see the danger.

Even if the situations in France and the U.S. are very different, it is somewhat ironic that Sarkozy has also taken measures that have worsened France’s deficit:

… far from helping to rein in the country’s bloated budget deficit, the early measures will in fact stretch it further – by as much as 0.6 per cent of gross domestic product, according to Barclays Capital – while only marginally boosting consumer spending. (FT)

Sarkozy has responded to the criticism by lashing out (again) at the European Central Bank which has infuriated Germany who is a strong supporter of the bank’s independence.

This is nothing new of course:

The rift between Sarkozy and Trichet has its roots in French politics more than a decade ago when as head of the Bank of France, Trichet sparred with then-Budget Minister Sarkozy over budget-deficit targets. It deepened when Sarkozy made the ECB a target during his election campaign. (Bloomberg)

I find it ironic that that it is those so-called conservative governments who have increased the deficit while accusing the left of doing exactly that if they were elected. That was the case between Bush and Gore as it was between Sarkozy and Royal.


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