Zero Hedge

Otherwise humorless White House press secretary Bob Gibbs had his first attempt at cracking jokes when he told Chinese premier Wen Jiabao that the latter doesn't have to worry about anything and that "there's no safer investment in the world than in the United States." [but to please not compare U.S. CDS levels to those of other G7 countries]. This came in response to Wen's earlier admonition that he wants assurances he isn't just funding the U.S. obesity epidemic, purchases of 5th vacation homes and bathroom ceiling-installed plasma TVs, by buying T-Bill after T-Bill. After Jiabao said he "wants assurances that [China's] investment is safe and requests the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets" Gibbs made it abundantly clear he pledges to "cut the budget deficit in half in hour years." He also handed Wen the 110+ page budget but specifically tore out the pages with worst-case 2010 assumptions of 7.9% unemployment (a number already surpassed and expected to hit 10% by most accounts) and even funnier GDP projections.

As the market has grown attached to hearing someone say convincing and reassuring stuff about just how swell everything is, Gibbs' stand up routine could not have come at a better time, seeing how treasuries had crashed in early trading only to be propped up on these wise and prophetic words of assurance. Just in case Gibbs' rhetoric proved insufficient, Treasury spokesman Heather Wong also chimed in:

"The U.S. Treasury market remains the deepest and most liquid market in the world. President Obama is committed to taking the steps necessary to restore growth and put this country on the path of fiscal sustainability, including cutting the long- term deficit in half over the next four years."

As a point of reference, the US budget deficit is expected to hit (in a best case) about $1.75 trillion in 2009 and slightly more in Treasuries is expected to be issued. Additionally, there is roughly $10 trillion in combined bailout guarantees, stimulus programs, assurance and assorted TARP derivatives floating around. Combined, these two number are roughly equal to the projected U.S. GDP of about $14 trillion (and about 14 times the graphic demonstration of what $1 trillion is... used to be a big number... now, nobody cares). Either way, I missed the Econ 101 lesson where you put all these ingredients in the pot, throw some lead in for good measure and end up with budget reduction gold. Hopefully Chinese student were paying more attention in class. Sphere: Related Content

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