Monday, January 5, 2009

All Gold in Fort Knox Not Enough to Put Humpty Together Again

Here is a quick round-up of what people who think about money think is happening with all of our money right now.

Paul Krugman is a very sad man:

"The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren’t lending; businesses and consumers aren’t spending. Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression."

He goes on to write that the only way out of this shitshow is through deficit spending.

"Under Mr. Bernanke’s leadership, the Fed has been supplying liquidity like an engine crew trying to put out a five-alarm fire, and the money supply has been rising rapidly. Yet credit remains scarce, and the economy is still in free fall.

Friedman’s claim that monetary policy could have prevented the Great Depression was an attempt to refute the analysis of John Maynard Keynes, who argued that monetary policy is ineffective under depression conditions and that fiscal policy — large-scale deficit spending by the government — is needed to fight mass unemployment. The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Mr. Obama’s plans to rescue the economy."

Owen Thomas, formerly of ValleyWag and now at Gawker, is sceptical:

"That's why I think the recession could be far longer than the 18 months most economists predict. Where, exactly, is growth supposed to come from? U.S. consumers and businesses are reeling from debt. The rest of the world is hardly better off. The expectation that government spending will lift us out of this mess seems akin to expecting that President Change will deliver us all a new bicycle."

And finally, from those bastards over at The Nation, a call for every dollar in America to be spent on this new stimulus package. They call for even more than Krugman!

"The senior economist of the International Monetary Fund recently warned of another Great Depression.

We don't need a stimulus, we need a recovery. And that means investing $1 trillion over the next two years."

Holy hell that's a spicy meat-a-ball. The article continues:

"Obama political adviser David Axelrod said this weekend that the new Administration is looking at a stimulus bill in the range of $675 to $775 billion over two years. But is that enough at this moment of metastasizing economic pain and deepening recession? Not according to CPC Co-Chair, Representative Lynn Woolsey of California, who said, "...anything much less than $1 trillion would be like trying to put out a forest fire with a squirt gun.""

Still no word on what our bowling buddy Mike G. thinks about all this. We will have a mutual friend harass him and get you faithful readers some inside info.

1 comment:

David Angelo said...

The fundamental problem is that we have used our poisiton as world imperial power to prop up a lifestyle that we didn't earn or deserve. Now comes the great 'leveling' which is what frightens so many - because it means that sitting around in a dumb office job working less than the majority of the world will no longer automatically guarantee we have the highest standard of living. Does that suck? Yeah. Is it fair? Absolutely.

All this obama bullshit about stimulus will help the market rally temporarily on the 'Inauguration Bubble.' You may see mirages of a recovery the first few months of obama, but any gain is short-term, psychological, and nominal. for more on these topics