RYviewpoint

Paul Krugman has a post on his NY Times blog that questions Obama's worries over inflation:

Back in 1993, James Carville — frustrated over the way fear of rising interest rates was crimping the Clinton agenda — declared,

I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.

Right now, however, the bond market seems notably unworried by deficits. Long-term interest rates are low; inflation expectations are contained (too well contained, actually, since higher expected inflation would be helpful). No problem, right?

Alas, I’m getting the sense that the Obama administration is intimidated all the same. We’ve got the president telling Fox News that he’s worried about a double-dip recession if he doesn’t reduce the deficit soon — as opposed to the concern I and other have that he’ll have a double dip if he doesn’t provide more support. (And why is Obama talking to Fox News, btw?) And the buzz is that admin economic officials are telling him that the bond market needs to be appeased, even though rates are low.

This is truly amazing. It’s one thing to be intimidated by bond market vigilantes. It’s another to be intimidated by the fear that bond market vigilantes might show up one of these days, even though you’re currently able to sell long-term bonds at an interest rate of less than 3.5%.

Yet that, according to rumors, is what’s happening.

Let’s hope the rumors are false. For we really need to be doing more about employment — and the debt outlook isn’t that dire, at least by comparison with past experience in advanced countries:

It would be a very, very bad thing if the administration is intimidated into passivity in the face of an employment disaster — or, worse, into neo-Hooverism — by the threat from invisible, and probably imaginary, enforcers.

I find it incredible that Obama who wanted to be a community organizer has lost his concern about people and jobs and is now totally absorbed in catering to the whims of Wall Street. It is hard to believe but his actions demonstrate it. It is an old story, a politician starts out with concerns for people, gets elected, and discovers money and status in catering to the rich and then sells out his original constituency. Obama appears to be going down this path.