Monday, December 12, 2011

Economic "Experts" Gather In DC To Explain Why Politics Has Doomed Us

image: "Dr. Doom," Nouriel Roubini (center), getting his doom on with the ladies

I copied the headline for this blog post word for word from the source story, except that I placed the word "Experts" into quotes. Why? Because we're doomed, all right, but even more so because of who it is that passes as an economic expert these days than because of politics. The first few paragraphs of this story let you know just how bad it's going to be:
As the U.S. government and governments in Europe respond to the global economic slump with conservative austerity measures, it’s easy to forget that the overwhelming professional economic consensus is that depressed countries that can afford to should be doing the opposite — ramping up government purchases of goods and services and putting off the budget cuts and tax increases for a few years.

This isn’t even close to what’s happening. And as the space between what these experts think should happen and what global elites are actually doing grows, the experts’ forecast is becoming more and more pessimistic.

Nowhere was this gloominess more clearly worn than at a symposium hosted by the New America Foundation in downtown Washington Wednesday evening.

The event itself centered on an October paper called “The Way Forward” by Daniel Alpert, Robert Hockett, and Nouriel Roubini, which explained both the sources of U.S. economic woes, and what needs to be done to fix them. But the paper’s authors, and the expert panel they invited to discuss it with them, all agreed that American and European politics are so out of step with the proper diagnosis and treatment that the country is likely to hobble along for years — and could even experience another recession.
First of all, let's pretend for a moment that these "experts" aren't actually out of their fucking minds. Difficult to do, I know, but let's pretend. Even if we accept their proposed "solution," ramping up government purchases of goods and services, their stated alternative, "the country is liable to hobble along for years - and COULD experience another recession," hardly warrants a headline screaming that we're DOOMED.

Having disposed with that nonsense, let's turn to their specific proposals:
In their paper, and their presentation, the authors listed several steps governments and government-aligned institutions could take to hasten recovery. But in the U.S., the most important step would require more, not less, government spending — and that’s just not in the cards given the current state of American politics.

“We need to do something about the demand side or we’re going to be facing a Japanese-style, continuous stagnation,” said Alpert, managing partner of investment firm Westwood Capital, in his opening remarks.

To provide the stimulus, the authors strongly favor the U.S. government acting as a direct purchaser and hirer, instead of increasing program benefits and otherwise putting more money in consumer pockets, as the payroll tax cut is designed to do. But in either case, the government isn’t prepared to act in proportion to the problem, if at all.

“The problem of course is that two of the three pillars require Congress to spend a very large amount of money,” said Liaquat Ahamed, a panelist, investment manager, and author of the book Lords of Finance: The Bankers Who Broke the World. “And the third pillar requires other countries to do the right thing in a way they don’t want to do at the moment.”
There are so many things wrong with the paragraphs above that I hardly know where to begin. Were these idiots completely asleep the past three years while the U.S. government ramped up deficit spending by an additional trillion dollars per year? If not, what exactly makes them think that ramping it up by say another trillion is going to do anything more than provide another temporary boost with zero lasting effects?

Then you have the idiotic idea of having the government "acting as a direct purchaser and hirer." To do what, exactly? Build a whole bunch more highways that we don't need as the age of cheap oil comes to an end, just like we did with Obama's stimulus package? Given that whole fiasco, are you at all confident that the money and material would be spent/deployed wisely and that those people the government hires would be used for projects that help the country transition to a powered down future? Because if you are, I have a unicorn herd out back at my place that I'd like to sell you sight unseen.

But perhaps the most outrageous aspect of this proposal is the utter refusal to acknowledge that there are limits to just how far in debt any entity can go, including a government, before its finances collapse, especially as the world is entering the initial stages of resource depletion. All of this is just Keynesiansm on steroids, of course, defying the old saying that the very definition of insanity is doing the same thing over and over again and expecting different results.

But wait, the madness doesn't stop there:
Ahamed was more optimistic than most of the panel that a large coordinated international monetary easing could serve as a “Plan B” if legislatures in the U.S. and Europe can’t get their acts together.
That's right, if the government can't SPEND its way into oblivion because of politics, it should PRINT its way there. Because there is no surefire way to stimulate the consumer economy more than devaluing the dollar further so that oil shoots up to $150 a barrel, or $200 or even more. I'm sure eight dollar-a-gallon gasoline would do WONDERS for all those hard pressed suburbanites around the country.

The article concludes with a former Reagan administration official trying to blame to whole mess on his former party:
But close observers of U.S. politics know how unlikely that is. Bruce Bartlett, a former Reagan adviser who is a harsh critic of the current Republican party explained why.

“Basically we’re still stuck in the situation we were three years ago and we haven’t made any progress at all except that our problems are much worse because of political reasons, because we now have a crazy party in charge of one of the Houses of our Congress and they won’t allow anything to happen because it’s in their vested interest to make things worse,” Bartlett explained in his typically exasperated way. “Plus they have a theory that is completely nuts…. I’m very depressed. I’d love to see some program like this [paper] enacted. I see zero chance of it happening. The most we can hope for is that a complete crazy person like Newt Gingrich gets the Republican nomination, the Republicans lose so badly that they lose control of the House and don’t get control of the Senate and then maybe in a year we can finally talk about doing something rational such as what is discussed in this paper.”
This is why I am adamant and maintain that the Democrats and the liberals and progressives are just as delusional as the Republicans and conservatives. I would actually argue that the latter's positions might actually be preferable since at least under one of their regimes, people will KNOW they are fucked and that the government won't help them. Better that, I think, than being lied to the whole way down as collapse accelerates.

It all goes comes back once again to the spoiled rotten, entitlement mentality that has so firmly taken hold in this country. We have added almost $10 trillion to the national debt since George Bush the Lesser took his first oath of office just over 10 years ago--a figure that is nearly DOUBLE the federal debt accumulated during the first 225 years of the nation's history. And that STILL isn't enough for us. If the economy won't grow naturally because it is no longer capable of doing so, why, we'll MAKE it grow, damnit. Future consequences be damned. That's our God-given rights as Americans. How incredibly pathetic we have become as a nation.

One last thing I want to point out is that one of the authors of this abomination is none other than "Dr. Doom" himself, New York University Professor Nouriel Roubini. Roubini has basked in the glory of having correctly called the housing bubble implosion and the 2008 market crash, but now is clearly crafting his message in such a way that is acceptable to his wealthy patrons. Because let's face it, if you are a middle aged economist you won't earn enough scratch to get a group of hot young models hanging off of you if you persist in telling the REAL truth--that the age of economic growth is over, and NOTHING is going to bring it back, not even massive amounts of additional federal deficit spending. Quite obviously, Roubini should henceforth be afforded exactly ZERO credibility by anyone who understands the true implications of peak oil to our modern industrial civilization.


  1. I love the line about "could even experience another recession", they keep talking this rubbish about a recovery and the danger that the recovery will stall, out on Main Street there was no recovery, the real world is still in recession. Although at this stage it might be more accurate to call it a depression. Mean while in places like Washington, London, Paris and Berlin the mad hatters tea party rolls on. We are truly through the looking glass, the lunatics have taken over the asylum.

  2. But how can you be pessimistic when you're surrounded by hotties?

    No, seriously Bill, keynesian economics treats the economy like an engine that needs "priming" from time to time to keep it humming along, and not to mention the continuance of Dr. Doom's little party there.

  3. The reality of the economic contraction that will be imposed by declining oil production, especially when oil production is impacted by political events such as today's "dry run" by Iran (practice closing of the Strait), is so "bad" where the average OECD citizen-consumer is concerned, nobody in the mainstream will discuss it. After all, most remember, or think they remember, Jimmy Carter - who was the only mainstream guy who's ever mentioned it. Honestly, for the majority of people, there's no preparing for the next paradigm - a civilization literally built on oil, that eats more oil Calories per Calorie of food than the food delivers is, as you say, doomed. It's not like one can save people by waking them up, not now, it's too late. They'll find out what's coming when it arrives, pull out their guns and if you've been telling people how to prepare, they'll probably come to your house, thinking you have.

    The body language of the underwear models in that photo, by the way, is quite revealing, when you compare the lower bodies to the upper bodies. :-)

  4. Where the hell was that photo taken, I wonder?? Anyway, it almost makes you want to be a professional economist!

  5. @Patrick--it's been around for awhile, at least a couple of years. It's GOOD to be The King's economist, apparently.

  6. I'll take the two on the left. Any questions?

  7. The effect of deficit stimulus spending depends on WHERE it is spent. For instance, if you spent that $15 Trillion on getting AMERICANS to rebuild bridges, heavy rail lines, hardening the grid, transport boats, ports, hydro-electric plants and so on, then those employees buy food, clothes, pay rent, mortgages etc and stimulate the economy. That's how it's supposed to work.

    On the other hand, you can take the $15 Trillion and just give it to your friends to put in their swiss bank accounts.

    Either way, you're in hock for $15 Trillion, but one of them stimulates the economy, the other loots it.

    Guess which path your "Leaders" chose?

  8. For instance, in South Africa recently, an Aussie economist called Bill Mitchell helped the govt get a million unemployed working to build infrastructure, roads, schools etc which allows the workers to send their kids to school, improves nutrition and their living standards.

    The plan next year is for 3 million.

    It's good for the kids work ethics to see their parents going out the door every morning to work.

  9. @TWM - "It's good for the kids work ethics to see their parents going out the door every morning to work."

    It certainly is, but that is obviously not the way our "leaders" see it since they clearly could not care less about job destruction.