Today's Geithner drubbing comes courtesy of Sen. Paul Ryan, who in a brief 3 minutes presentation indicates why the proposed budget is not only a joke (the fact that he compares it to a "box of cigarettes" speaks words for the future health of this country. One wonders if it is Ben Bernanke or Goldman Sachs who has assumed the role of Surgeon General), but why the bond vigilantes are just waiting in the corridors to see the Fed and PD's control over the bond market slip before they bring the house down.
"If you are going to solve this [budget] problem, why don't you do that. Why don't you give us a budget that actually gets the deficits to a sustainable level."
Then Ruan quotes a very prescient observation from Peter Orszag before the WSJ:
"The 'unusual situation' the government finds itself in—with other countries willing to finance U.S. debt at low rates— won't last. When it flips, the question is how do you get ahead of that to avoid the downward spiral of rising interest rates, a plunging dollar and a sinking economy."
"The vigilantes in the bond markets are going to get us, and the American people are going to get hurt. Why aren't you giving us a budget not punting to a commission, but why aren't you giving us a budget that using your own definitions and standards is actually sustainable... You can blame Bush only so long... You obviously inherited a tough situation, you are only making it worse."
Since the Fed and Primary Dealers controls the bond market (for now), Rep. Paul has nothing to worry about. For now.
Cllick on graphic below and fast forward to 62 minutes in the video for exchange.