You too can lose 3 wars and get the Medal of Freedom!!!
Archive for June, 2011
Unemployment claims: still above 420,000/week!
The President yesterday sounded like a man who didn’t understand basic economics.
The deficit fetish is wholly unnecessary.
Doing absolutely nothing about the deficit will in fact reduce the deficit further: let the tax cuts expire, get out of Iraq, Afghanistan, and Libya, get health care reform up and running, and voila, the deficit disappears!
And surpluses would be the new normal if we simply got our health care costs down to the level of every other developed country!
Meanwhile, 25 million Americans are out of work.
America should be increasing its deficit in the short term to address this problem, particularly given how low interest rates are.
Bringing half of the unemployed back to work would significantly improve economic growth and help reduce the deficit.
The private sector simply doesn’t create enough demand at the moment to start hiring, so a government jobs program is needed.
Cost of hiring 10 million workers at $30K/year to fix infrastructure, bring energy efficiency to homes and businesses, and restore hope across the country: $300 billion/year, or less than half what we currently piss away annually on the Pentagon.
Other things that could be done:
Bring everyone into Medicare, which would significantly reduce health care costs.
Lower the Social Security eligibility age temporarily to 55, since most of the unemployed who are that age or older will never be hired again.
Set up a national infrastructure bank to finance the vast amount of work we’ve not been doing for the past 30 years.
Allow the dollar to decline further, addressing global imbalances that effectively allow surplus countries to keep Americans unemployed and Americans to export inflation to surplus countries.
Gorilla says: “The solutions are easy, but the leadership is absent!”
Inflation: a whopping 2.7%!
Unemployment: still very high!
Economic growth: still very anemic!
Financial services industry: still a mess!
What’s an ECB man to do?
Reduce economic growth.
Put the PIIGS through 10 years of grinding deflation and unemployment.
Stay watchful in case nonexistent inflation and confidence fairies ever arrive.
Gorilla says: “Same stupidity on this side of the pond!”
Austerity wins again, the only losers are all the citizens of all the countries whose banks led the lemmings over the cliff!
And the reality is that this utter folly won’t save Greece or the banks, contagion will continue until national leaders stop lying about their banking systems, stop fearing nonexistent inflation, and stop trying to conjure up confidence fairies when there simply isn’t sufficient demand for anything more than a very weak recovery.
What the world needs is vastly more stimulus, particularly in the US and Europe, accompanied by global balance adjustments through currency appreciation in more vibrant emerging markets like China, India, and Brazil.
What we’re getting is a lost decade of high unemployment and mediocre growth, an entirely preventable disaster if we had leaders who weren’t wholly owned by the financial services industry.
Gorilla says: “Capitulation to the forces of stupidity is not what used to be called democracy!”
But it always seems to happen in places we haven’t secured after 10 years of trying!
Of course the idea that the Afghan government is ready to take over on security makes about as much sense as the Taliban deciding to lay down their arms and promote women’s rights.
Yet the Pentagon continues to feed the fantasy that we will win any decade now, because the alternative is that we might finally get serious about an exit strategy.
Gorilla says: “Failure is an orphan across the generations!”
Commit fraud with your mortgages against the consumer and face a fine by Uncle Sam of $120 million…
Is it any wonder there’s not much trust between the taxpayer and the banker?
Gorilla answers: “Or between the taxpayer and those he elects to uphold the rule of law!”
House prices continue to fall, and they will do so until their long-term price trend is reached…
That’s roughly 10-15% lower, and it’s quite possible prices will overshoot the trend on the downside.
What’s needed is what’s been needed all along: modification of mortgage loans by bankruptcy courts, reducing principal so as to keep homeowners in their homes.
Alas, the cramdown approach has twice failed to pass the Congress, and the Administration’s housing program has been a miserable failure.
It’s difficult to see how the US economy will recover strongly so long as housing remains a drag and unemployment remains unacceptably high (well, it should be unacceptable at these levels but our leaders don’t seem to care).
Gorilla says: “Austerity doesn’t hire and it doesn’t sell houses!”
A central banker watches as massive fraud pervades the financial system, then has to flee the country because he fears his life is in danger…
No, it’s not Greenspan, or Bernanke, or Trichet: it’s Afghanistan!
Gorilla says: “No more in control than those other guys!”