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Economy
In reply to the discussion: Weekend Economists' Harvest Ball September 21-23, 2012 [View all]Demeter
(85,373 posts)14. No Wonder the Economy Isn’t Improving
http://www.washingtonsblog.com/2010/03/no-wonder-the-economy-isnt-improving.html
Ive read countless news headlines recently about how economists are surprised over an unexpectedly bad economic indicator. But its not surprising at all. Its no mystery. The government hasnt taken the necessary actions, and has instead been doing all of the wrong things. Lets recap:
The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach. Nobel economist Paul Krugman and leading economist James Galbraith agree. They say that the governments attempts to prop up the price of toxic assets no one wants is not helpful.
The Bank for International Settlements often described as a central bank for central banks (BIS) slammed the easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, the use of gimmicks and palliatives, and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts will only make things worse. BIS also cautioned that bailouts could harm the economy (as did the former head of the Feds open market operations). And BIS warned that the Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis.
Virtually all leading independent economists have said that the too big to fails must be broken up, or the economy wont be able to recover. Instead, they have been allowed to get even bigger. While modern economic theory shows that debts do matter, the U.S. is spending on guns and butter like debts are a good thing.
Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers. (Not only has the government rewarded the gamblers, bailed them out and let them engage in a new round of risky betting, but it hasnt even reined in credit default swaps.) And instead of trying to restore trust in our financial system which is a prerequisite for any sustainable economic recovery Summers, Geithner, Bernanke and the boys have tried to sweep the problems under the rug and con the public into believing that everything is okay and that no real reform is needed....And instead of rebuilding the real economy the boys are simply simply rebuilding the house of cards...And while stopping the rising tide of unemployment is key to reversing the financial crisis, the government hasnt done much at all to staunch the loss of jobs.
MULTIPLE SUPPORTING LINKS
Ive read countless news headlines recently about how economists are surprised over an unexpectedly bad economic indicator. But its not surprising at all. Its no mystery. The government hasnt taken the necessary actions, and has instead been doing all of the wrong things. Lets recap:
The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach. Nobel economist Paul Krugman and leading economist James Galbraith agree. They say that the governments attempts to prop up the price of toxic assets no one wants is not helpful.
The Bank for International Settlements often described as a central bank for central banks (BIS) slammed the easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, the use of gimmicks and palliatives, and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts will only make things worse. BIS also cautioned that bailouts could harm the economy (as did the former head of the Feds open market operations). And BIS warned that the Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis.
Virtually all leading independent economists have said that the too big to fails must be broken up, or the economy wont be able to recover. Instead, they have been allowed to get even bigger. While modern economic theory shows that debts do matter, the U.S. is spending on guns and butter like debts are a good thing.
Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers. (Not only has the government rewarded the gamblers, bailed them out and let them engage in a new round of risky betting, but it hasnt even reined in credit default swaps.) And instead of trying to restore trust in our financial system which is a prerequisite for any sustainable economic recovery Summers, Geithner, Bernanke and the boys have tried to sweep the problems under the rug and con the public into believing that everything is okay and that no real reform is needed....And instead of rebuilding the real economy the boys are simply simply rebuilding the house of cards...And while stopping the rising tide of unemployment is key to reversing the financial crisis, the government hasnt done much at all to staunch the loss of jobs.
MULTIPLE SUPPORTING LINKS
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