Federal Reserve board chairman Ben Bernanke said Monday he didn't think that the U.S. economy would slip back in to recession, saying that consumer spending and business investment seem strong enough to keep the economy growing, albeit at a relatively subdued rate. LINKSet aside all debate about the accuracy of the Government's GDP calculation (there are several problems) and recall that Bernanke is the expert who said as recently as 2007 that housing prices are not too high, there is no housing bubble and everything in the mortgage market is fine. The fact of the matter is, I'm not sure I can ever recall Bernanke issuing an accurate economic assessment. The persistence of the public's faith in Bernanke's garbage is absolutely astonishing.
I'm not sure where Banana Ben sees growth coming from other than from massive Government stimulation. The housing market was propped with several hundred billion in tax and mortagage subsidies (actually $1.25 trillion in direct Fed intervention). Not much of a bounce for all of that money.
And I recently found out how the bounce in sales at GM and Chrysler was engineered. GMAC has been issuing car leases with an unusually high residual value. What this does is lower the monthly payment of the lessee. However, at the end of the lease, the "residual value of the car will be substantially higher than its market value. Guess who pays for that? The Government aka the Taxpayer. At some point everyone who is willing to buy an American-made car in exchange for a lower monthly payment - AND fog a mirror from a credit-worthy standpoint - will have made their move. And just like with the cash 4 clunkers program, the sales of GM/Chrysler (and probably Ford) cars will stall out.
So with housing and autos hitting a wall, where is Bernanke envisioning real economic growth? I have no idea and notice that he does not offer any ideas.
With that as a backdrop, and in the context of Germany and the UK calling for budget cuts and Obama today demanding that all Govt agencies cut their budgets by 5%, does anyone really believe budgets will be cut and spending reduced?
How is it at all possible for these Governments to implement "austerity" programs, cut Government spending AND service their debt? The majority of European and U.S. economic activity has been created by trillions in Government stimulus (direct and indirect). If the Governments take away this punch bowl, the economies tank - hard. Then how do these Governments feed their people and service their debt without printing massive amounts of money?
Does ANYONE really believe that the leaders in power right now will commit this political suicide and actually cut spending? Conversely, if they refuse to cut spending, where is the organic, private sector economic growth going to come from?
It's no secret that a second stimulus Bill is working its way thru the bowels of Congress right now. The only question is how large it will end up being. My best guess is that something substantial (i.e. several hundred billion) will be passed in time for it to create some kind of economic dead cat bounce ahead of the November elections.
Of more significance and likely of much larger size, will be an eventual QE2 program announced by the Fed, in conjunction with the EU Central Bank. I am guessing several trillion. This will allow the U.S. and EU to cover another big bank bailout, which will be necessary as the collapse in commercial real estate converges with the next wave of big mortgage defaults/housing foreclosures about to hit the U.S.
I would suggest that the recent price action in gold, which has inexorably risen in price along with the U.S. dollar, is forecasting both increased Government spending deficits and round two of the Fed's money printing program.
Camus was an existentialist author, not a member of the theater of the absurd. Ionesco, Albee and Beckett were play writers whose work could be included in the Theater of the Absurd. It would be good to get this right if you want to use the metaphor.
ReplyDeleteActually, Camus was the "grandfather" figure for the writers to whom you refer - kind of in the same way that Neil Youung is considered to be the "grandfather" of the grunge music.
ReplyDeleteI'm well aware of who and what Camus was and I studied existentialism in college, in depth. Absurdity has its seeds in existentialism, especially in the works of Camus and Sartre.
You are correct, Camus was not involved with the actual Theatre of the Absurd body of plays, but I felt that the allusion as I employed it added an extra layer of subtlety.
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