It is hard to overstate Gordon Brown's pivotal position in the economic future of the world right now. Britain is kind of our conduit to the real world outside "fortress USA" or whatever the hell we think we are.
Somebody needs to impress upon our government that 1) this thing is worse than the administration seems to understand, 2) this thing is global and must be countered globally, and 3) the US economy is so big that the rest of the world cannot save itself without full US participation in global re-flation. The administration's view, that a rebound is so imminent and durable that we can rationally be talking about deficit reduction, is not shared elsewhere. And that set of assumptions can potentially help take down the global system.
Only Obama can lead American political opinion toward a global and appropriately fiscally "irresponsible" stance.
In 1993 (1994?) Bill Clinton was doing his college bull-session bit with some piece of economic policy, going back and forth--it's in the budget, it's out of the budget, it's in the budget...
Al Gore came in the oval office, asked to speak freely and said: "With all due respect, Mister President, you need to get with the goddamn program."
I hope Gordon Brown's talking points are similar.
Brown woos Obama on global deal
GORDON BROWN hopes to forge a partnership with President Barack Obama in Washington this week, to call for a “global new deal” to lift the world out of recession.
As he prepares for his first White House visit since the president’s inauguration, the prime minister has hinted that he is ready to make further tax cuts to boost the UK economy.
Brown will meet Obama on Tuesday and address a joint session of Congress on Wednesday. Aides say he has both to demonstrate to a sceptical British public that he commands the respect of the president, and to persuade the American political establishment that global action is needed to rescue the US economy.
Brown is under pressure to persuade American political leaders to sign up to bold aims for the G20 summit of industrial and leading developing nations, which is to be held in London next month.
Many US politicians believe economic policy should put America first, and have shown little interest in concerted global action. Brown will argue for a renewal of the transatlantic relationship, with the two powers working together to solve global economic problems.
http://www.timesonline.co.uk/tol/news/uk/article5822265.ece
Failing the test
It’s a depressing spectacle: on both sides of the Atlantic, policy-makers just keep falling short — and the odds that this slump really will turn into Great Depression II keep rising.
In Europe, leaders rejected pleas for a comprehensive rescue plan for troubled East European economies, promising instead to provide “case-by-case” support. That means a slow dribble of funds, with no chance of reversing the downward spiral. Oh, and Jean-Claude Trichet says that there is no deflation threat in Europe. What’s the weather like on his planet?
On this side of the Atlantic, Tim Geithner seems committed to the view that banks should stay private even if they’re bankrupt, because — well, just because. James Kwak is driven to exasperation:
To be blunt, it sounded like the “private is better” mantra we heard from the Bush administration, and (to a slightly less extent) the Clinton administration before them. Sure, most people agree you don’t want all individual lending decisions being made by bureaucrats in Washington, but that’s just a straw man. There are valid reasons to debate whether nationalization is the best solution; in particular, if you were to take over Citigroup, even for a short period of time, would that immediately weaken Bank of America so much that you would be forced to take it over the next day? And what about JPMorgan Chase? But that’s not what Geithner said. He said “private is better.”
And so is the extremely moderate Tim Duy, over the insistence of policymakers that the “true value” of assets is higher than anything the market is actually willing to pay:
Policymakers are assuming that restoring proper functioning in credit markets - and confidence in general - is equivalent to a housing price rebound. They seem incapable of envisioning a world in which this is not the case. This tunnel vision prevents policymakers of trying to devise policy which assumes that the many of the assets in the banking system are simply “bad.” For Bernanke and Geithner, there are no bad assets. Only misunderstood assets.
And we have the spectacle of James Baker — James Baker! — attacking the Obama administration from the left, calling for temporary nationalization of zombie banks as part of the recapitalization process.
The sickening feeling of drift — the sense that policymakers are refusing to face hard facts, and are dithering while the world economy burns — just keeps getting stronger.
http://krugman.blogs.nytimes.com/2009/03/02/failing-the-test/
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