G20: Timmeh denied, Global stimulus died, Krugman cried…
We have a psychological-economic breakthrough in Europe!
Timmeh is coming home empty-handed, again. Euro Zone Finance Ministers took his charge card away. Krugman is beside himself, again.
First, from the Financial Times: G20 drops support for fiscal stimulus
Finance ministers from the world’s leading economies ripped up their support for fiscal stimulus on Saturday …
The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances.
And from Paul Krugman: Lost Decade, Here We Come
“It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US.
…The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity. But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.”
If Keynesians wanted to prove themselves and their theories then they should have done a MUCH MUCH MUCH better job managing and distributing and dividing up the 1 TRILLION dollars in stimulus and 787 Billion in TARP.
No matter how much we give them, when it fails they will claim it is because ‘it wasn’t big enough’ and/or ‘ we tightened spending and deficits too soon’.
You had your chance and the double dip is here. Personally I think the FED must be buying the Treasuries since the Bond vigilantes appeared in the EU Zone before here.
Guess what, it is called a business CYCLE for a reason. It would have been an awful recession but hiring would be back were it not for the HEALTH CARE fiasco and FINREG fiasco combined with the credit bubble bursting.
CONSUMERS are 70% of our GDP. Obama and Timmeh keep talking about how the US consumer will not be carrying the global economy. How they plan to increase American exports 30% (AS IF!!). How we have to make things and turn down our thermostats and not live beyond our means.
Ponies are nice but expensive to feed and house.
The rest of the world is NOT, I repeat is NOT, going to SUDDENLY go on an American consumer like spending binge. Never were, never will IMO.
People like Tom Friedman go to China and are escorted (of course) around ‘model’ cities of urban planning fantasies but fail to talk about the millions of displaced Chinese with no rights working in conditions that lead to them jumping to their deaths rather than face another shift.
India is a booming Democracy and even their population is not enough to pick up for the loss of American consumer demand on global growth which of course ASSUMES that they would even want to which I doubt. I have never bought into the idea that these emerging capitalist Western or otherwise markets were going to produce American like consumers anyway. We churn and burn and move about here in the US like nowhere else, and in doing so we use a lot of ‘stuff’ h/t Carlin!
The EU zone is out of time and they have no Fed to protect them from ‘bond vigilantes’. They are certainly not going to have consumers going on spending sprees just as their socialist safety net is being taken away.
IMO this has always been a pipe dream. First they TPTB claimed there was a grand ‘DECOUPLING’ and the hits to the American middle class (frozen income growth and dropping home values) and therefore the American consumer, did NOT MATTER because the ‘affluent’ were spending like mad (so what else is new?) and we were decoupled from the global economy so we wouldn’t be a drag.
THEN they claimed ‘it’ (American middle class consumers losing equity) was a problem limited to subprime and besides ‘those low-end’ consumers didn’t contribute much to GDP (ough, cough) so it would not spread.
Besides they said, CHINA was growing and MNCs were all doing business overseas and hey the low US Dollar only hurts the American consumer anyway and they had used up that market so who cares right? Right frakkers? That bit you in the axx GE huh?
So through frozen income growth, loss of home equity and then cratered 401Ks and finally unemployment and associated drying up of consumer credit lines the UBER Geniuses like Geithner and Obama keep dreaming that some OTHER MYTHICAL CONSUMER will APPEAR MAGICALLY! and start buying ALL THE STUFF THE REST OF THE WORLD MAKES.
so where are they?
The party’s over Keynesians. Argue til you’re blue in the face. G20 Euro zone members told Timmeh to take a hike. They are cutting their deficits and HAVE to slash spending.
Thank you Germany for putting the brakes on the EU spendulus types. Now if the rest of the G20 is not going to spend, Ben can’t singlehandedly keep his fiscal Treasury purchases, ZIRP policy going and drop dollars in a vacuum by himself. Right? Gawd tell me I’m right!
Surely Timmeh and Obama will back off their ridiculous 30% export driven economic model now that the US Dollar is soaring as the tallest midget in the room. Surely they see we cannot increase exports 30% while the Euro drops to parity vs the USD? Right? Shirley? Anyone?
Meanwhile the GOP is certainly NOT going to sign on for any more spending and the Dems had to cut their latest stimulus in the house from $200b to $90b in a final gasp of UE/COBRA extensions.
When will they get a CLUE that it is THEM,(CONGRESS and Obama), and their business fees, fines, taxes, mandates, regulations that is stopping the economic growth?
Yeah probably never. Dunno why I saw the results of the attempt as the EPIC FAIL it is and shifted my view, why can’t they? I am thinking Amity Shlaes had it right about WWII ending the Depression and NOT FDR spending policies.
That’s the good things about elections! Hey we are already almost halfway done with the Obama Administration! Yay!
Hang on Sloopy. You can’t keep a good economy down and America rawks. After we sweep out the bums in November we can out a hold on the spending and roll back the worst of the Obamacare bill by not funding it.
Then we can get BACK on track in ’12 with hopefully someone like Romney or a Big Dawg Dem who understands business and can read an unemployment report (and embraces free market capitalism).
As government shrinks confidence will be restored and we can get back to doing what we do best in America, innovating, engineering, feeding the needs of the present and the future.
So say we all. Make it so! And assorted other SciFi commands!