Friday, January 15, 2010
From David Rosenberg's daily missive at Gluskin Sheff today:
Question: Why did God create economists?Also, on the Obama Administration's underutilization of former Fed Chairman Paul Volcker:
Answer: To make the weatherman feel good about themselves.
The fact that Paul Volcker, whose integrity is fully intact, supported this ticket and the luring effect this had on a lot of folks, should not be forgotten. If Paul Volcker is on your side, then you must be on a path that is going to do some good from an economics perspective at the very least; and you must be a moderate too. Instead what we have is the loss of an additional five million jobs since the 2008 election and a record level of intrusion by the government into almost all aspects of the financial markets and the economy and confidence levels among consumers and small businesses languishing at recession levels.Well put. Independents who were swayed by the inclusion of the only former Fed chairman with any credibility left are rightly disappointed at this juncture.
Now we see that all Paul Volcker really was to the Obama team was a vote-getter during the election — it is really disturbing to see this article on page C1 of the WSJ (Volcker’s Influence is Diminishing). One would think that the person who took the tough action to rid the economy of inflation, and it took two severe recessions but for the greater long-term good, would be the guy you would want to have implementing debt-reduction and austerity programs that will help take the economy into a completely fresh up-cycle, even if it takes five years to get there, as opposed to policies that are merely going to prolong the malaise, just as the New Deal did back in the 1930s with respect to resource misallocation on a grand scale.
To save the banks to only then apply a special tax to the banks to pay for the ongoing stimulus aimed at perpetually stimulating a 71% consumption/GDP ratio and a 67.4% homeownership rate is just one display of policy confusion that we are sure will be discussed in detail in future economic history textbooks.