Wednesday, October 6, 2010

David Stockman: US Is in ‘Race to the Fiscal Bottom’ -

David Stockman: US Is in ‘Race to the Fiscal Bottom’ -

Wow. Two links in one day to the Fiscal Times. There is a good interview with David Stockman, who encapsulates just how far crony capitalism has infected the organism. Here's my favorite quotes:
We are not in a conventional business cycle recovery, so stimulus is futile and just adds needlessly to the $9 trillion of Treasury paper already floating dangerously around world financial markets. Instead, after 40 years of profligate accumulation of public and private debt, and reckless money-printing by the Fed, we had an economic crash landing, which left us with an enduring structural breakdown, not just a cyclical downturn.
In effect, we undertook a national leveraged buyout, raising total credit market debt to $52 trillion which represented a 3.6X leverage ratio against national income or GDP.

We shall surely take years to wind that debt down, resulting in lower economic and job growth.  His prospects for the future:
Obama’s presidency is a profound disappointment. So far, he’s proven that when Republican’s start elective wars, Democrats can’t end them; when Republicans empty the Treasury, Democrats can’t replenish it; when Republicans put a middle-class destroying money printer at the head of the Fed, Democrats reappoint him; and when the Republicans unleash an orgy of dangerous speculation on Wall Street, Democrats pass a contentless, 2,300 page, enabling act which will do nothing to protect Main Street from another financial meltdown, even as it keeps K Street fully employed. 
That's about right.  The Tea Parties, horrified at what they see, have no idea what they are getting into.  Read the whole article.

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