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Top Business News from The New York Times

- Citigroup Posts 20% Increase in Third-Quarter Earnings
- U.S. Posts Record $374.22 Billion Budget Gap

The juxtaposition - theirs, not mine - has some of the force of haiku.

Reflecting its vast size, Citigroup earned more than any company in the world last year, generating $15.3 billion of net income. It has earned more than $4 billion in each of the last three quarters.

Hmm...so even this giant among giants earned in three months what we the people are spending per month on our occupation of Iraq, minus reconstruction costs. They'd have had to borrow to meet that expense. Oh, that's right, so do we, the people, have to borrow that money. And we're able to, because of the power of government to tax. Because institutions that can loan that kind of money, or buy whatever paper IOUs plus interest our government issues know that the US of A will raise taxes before it defaults on interest payments.

Ever wonder who gets those interest payments on our debt? I've checked among my fairly wide circle of friends, not a one of them, as far as they know. Sorry, I don't have the answer, but I'd sure like to know, cue informed readers.

"It is very clear their earnings model is working," said Robert Albertson, chief strategist at Sandler O'Neill & Partners, a New York investment bank. "The only question is about the loan-loss provision."

Most analysts were not expecting that Citigroup's provision for bad loans would decline as sharply as it reported today.

But Citigroup and other big banking companies were under intense pressure from regulators to increase loan-loss reserves a year ago, Mr. Albertson said. That pressure has decreased over the last 12 months.

"It was a big mess a year ago," Mr. Albertson said. "Now we have cleaned up the mess, and this is a normal number. Time after time at the end of a cycle, the banks always over-reserve at the end."

"Given how big they are and that they reflect a pretty good microcosm of corporate and consumer financial conditions, it was good news" that Citigroup sharply cut its loan loss provision, said Guy Moszkowski, an analyst at Merrill Lynch. "But beyond that, the revenue trends from last quarter, which were basically flat, were not spectacular."

Comments by informed readers as to the implications of the above are welcomed and will be shared with other readers.

I'm not suggesting any of us should begrudge Citigroup any good news. And Mr. Moszkowski, despite his hesitation to pronounce revenue trends to be "spectacular," has listed Citigroup stock as "buy." Yes, the economy is recovering, the business cycle is reasserting it's up phase, but all is not right with the world.

When Max "speaks" I do tend to listen and I think he's right about the folly of liberals becoming orthodox deficit hawks. And the current announced deficit, though a record-setter, is less than the administration's own prediction. The real issue is what we're buying with all that borrowing? Nor does it help that the administration flat out lies about how much of the deficit is the result of tax cuts, and how easily that deficit can be managed in the future, not to mention the not so hidden agenda of starving the Federal government to undermine it's ability to do what the vast majority of Americans have made clear, again and again, they want their government to do, that is, to maintain the physical and social infrastructure that undergirds the very notion of the American dream.

Administration officials warned the deficit, which they blame on sluggish government revenues and rising expenses related to the war on terrorism, may be even larger in the current 2004 budget year, which began Oct. 1.

``Although the deficit is still projected to increase in 2004, and will likely exceed $500 billion even with a strengthening economy, we can put the deficit on a responsible downward path if we continue pro-growth economic policies and exercise responsible spending restraint,'' said Joshua Bolten, who heads the White House's Office of Management and Budget, in a statement issued with the budget figures.

Treasury Secretary John Snow said a rebounding economy should help the budget going forward. ``As the economy grows, government revenues will go up, which will help keep the deficit under control,'' he said in a statement.

Under their control, that is. Remember, according to the President, when the Federal government posts a surplus, it's been overcharging someone. Apparently, it doesn't work in reverse.