You can smell the fear and the alarms going off–not by reading The Nation (snore…kick me when it has something new to say) or The New York Times, whose "economic" reporters, with one or two exceptions, are astonishingly dumb. For some real insights, look to the Financial Times and The Economist. And the message coming loud and clear in the space of a few days: austerity is a loser and, if we don’t start printing gobs of money EVERYWHERE and FAST the entire global economy is heading into the abyss.
Here is Martin Wolf, the chief economic writer for the Financial Times. Personally, I always find that Wolf has something interesting to say, even if I don’t agree with it–but he has been regularly and consistently right about the roots of the financial meltdown and the solutions. Under the headline, "Time to think the unthinkable and start printing again", he wrote last week:
It is the policy that dare not speak its name: the printing press. The time has come to employ this nuclear option on a grand scale. The alternative is likely to be a lost decade. The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.[emphasis added]
With UK gross domestic product still 4 per cent below its pre-crisis peak, this depression would be longer and costlier, in terms of lost output, than the Great Depression of the 1930s, as I noted four weeks ago.[emphasis added]
Wolf was mostly focused on the insanity of the policy of the U.K. Conservative government but he is really talking about the entire world when he ends:
A far greater threat is that a prolonged period of feeble demand would undermine supply, impoverish the country and bequeath a legacy of huge public debts. The big risk, in short, is now of a lost decade. Act now. That must not happen.[emphasis added]
He does not stand alone. The Economist weighed in with a "leader" article ("leaders" are essentially editorials reflecting the official voice of the magazine) in its past issue entitled simply, "Be afraid", with a subtitle: "Unless politicians act more boldly, the world economy will keep heading towards a black hole". What should we be afraid of?:
"… even if a catastrophe in Europe is avoided, the prospects for the world economy are darkening, as the rich world’s fiscal austerity intensifies and slowing emerging economies provide less of a cushion for global growth. Third, America’s politicians are, once again, threatening to wreck the recovery with irresponsible fiscal brinkmanship. Together, these developments point to a perilous period ahead.[emphasis added]
America’s economy is still limping along, though the summer slump in share prices and consumer confidence suggest future spending will weaken further. The Federal Reserve is trying new ways of support, somewhat half-heartedly. Whatever it does, America is currently on course for the most stringent fiscal tightening of any big economy in 2012, as temporary tax cuts and unemployment insurance expire at the end of this year. That could change if Congress came to its senses, passed Barack Obama’s jobs plan and agreed on a medium-term deficit-reduction deal by November. If Democrats and Republicans fail to hash out a compromise on the deficit, draconian spending cuts will follow in 2013. For all the tirades against the Europeans, America’s economy risks being pushed into recession by its own fiscal policy—and by the fact that both parties are more interested in positioning themselves for the 2012 elections than in reaching the compromises needed to steer away from that hazardous course.[emphasis added]
I do not agree with the need for a deficit-reduction "compromise" because, as I’ve argued for a very long time, the entire deficit and debt "crisis" is phony and a hysterical meme that too many people have bought into (it really does feel like the economic version of the conventional wisdom over the Iraq war but I digress).
But, there is a common thread running through the leading voices of the globe’s economic organs:
Austerity does not work and is a moral disaster.
Our foolish elected politicians in the U.S., of both parties, are guaranteeing more misery and disaster for the people by refusing to lavishly and aggressively open up the spigots–and, respectfully, the president’s most recent proposal is not enough.
The pain being faced by 99 percent of the people is unnecessary. We can get out of the current Depression if we put people back to work with government action–and, then, get to work on the equality and robbery of the nation by a few.