Is Obama ignoring Wall Street?
There is no one in the Obama administration like Robert Rubin, who had the ear of President Clinton. Rubin convinced Clinton that the Bond Vigilantes would riot if he pursued policies that would lead to a structural federal deficit, i.e., one that would widen despite a growing economy. So far, the Bond Vigilantes haven’t gone on a rampage despite projections of $10tn in deficits over the next 10 years. So it is no wonder that Obama’s political advisors are acting as though they’ve been handed a blank check by the bond market. However, the longer they ignore the economic advisors, the greater is the likelihood that the blank check will bounce.
Me: Indeed, at a think tank conference I attended yesterday, both Rubin and Roger Altman expressed great concern about the deficit. They definitely seemed to want budgetary action sooner rather than later. Actually, they implied financial markets will demand it.