Leaders Helpless As Atlantic Crisis Deepens
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  • Kenny

    “But in fairness to the political leadership and the central bankers trying to cope with the biggest economic mess since World War Two, we have to remember that the world’s economic problems today are unprecedented.”

    But in fairness to the turth, these are the people that got us in the mess.

  • Luke Lea

    “the accumulation of vast foreign reserves in countries like China and Japan has changed the nature of global trade and finance in ways that are hard to understand.”

    Of course it’s not supposed to happen when trade is truly free, but does anyway because the Chinese central bank (aka Communist Party leadership) artificially depresses the value of the Yaun (sp) in order to (a) keep the export sector growing, the heart of China’s industrialization process; and (b) accumulate vast reserves of dollars which it can use at its descretion to finance overseas investment in places like Africa and Latin America, stuff in corrupt officials overseas bank accounts, but mostly buy U.S. Treasuries.

    When something like this happened with Japan in the 1980’s we threatened them with import duties on automobiles and other exports and before you knew it Japan starting building a lot of their automobile assembly plants right here in the United States.

    Of course this would not solve the fundamental problem of our trade with China — forcing U.S. workers to compete with peasants at coolie wages — but it would be a step in the right direction in so far as rebuilding our heavy manufacturing sector is concerned. And that is going to happen on way or another Professor Mead. Mark my words.

  • Mr Mead,
    I stumbled upon you about a year ago and I find your take on things intelligent and refreshing.

    I am a small government, liberty over state, hardcore conservative, but I realize we can’t just act like a bunch of 60’s hippies and burn it all down, man.

    You’re essays on the blue model and how we need to get past it are brilliant. I’ve pushed them on to liberals I know out in the blogisphere, and most do not seem interested, which is a tragedy.

    Conservatives I know don’t seem too interested either. I do hope DC policy makers and government officials at the state and local levels are reading you. Continuing down this path will lead us to ruin, but it’s not enough to say that. As you say, we must replace it with something.

    I personally believe that much of the financial shenanigans can be cleaned up by simply removing all government safeguards.

    A more radical step would be to modify corporate law as it pertains to financial corporations so that the leadership of financial firms have some personal stake in the enterprise and bear some personal legal liability.

  • “US policy makers are as clueless and dazed as their European counterparts. ” And this has not been the case exactly . . . when? If, as has been suggested, the American economy has fallen to stall speed, that is the time for the would-be pilot to take his/her hands off the controls and to let the airplane fly itself, which it will do if not interfered with.

    There is no hope, finally, that salvation will come from the leadership of putative elites. It will come when and if – a big if – the inept hands of these betters of ours (just ask them) are removed, and kept as far away as possible from, the controls.

    Then, and only then, we’ll fly right again.

  • Ann

    There are answers out there but academia ignore them. Read Von Mises instead of Keynes. Any follower of Austrian Econmics worth their salt has been predicting this outcome for the past sixty years or so. Government manipulated monetary policy was always going to lead to this disaster. In The Theory of Money of Credit, Von Mises first proposed the ABCT (Austrian Business Cycle Theory) which explains and predicts these business cycles/bubbles and proposed how to reform them.

  • Jacksonian Libertarian

    There are answers, it’s just so many in leadership are committed to the status quo, and would rather ride it down in flames and take everyone with them than change.
    When you are losing the battles, you should fire the generals.

  • Bonfire of the Idiocies

    I think many of us are intelligent to realize that there are no easy solutions to these problems. The people who DO seem to think there are easy solutions ARE our leaders, at least, they speak with a glibness and assuredness that would indicate that they have the easy solutions…. “Never waste a good crisis”, “of course we’re spending money, it’s a stimulus”, “I won.”

    What makes ME personally angry is NOT that I think there are easy solutions that are not being undertaken but that the current leadership seems to be stuck on stupid by insisting its current course is correct in spite of all evidence to the contrary. Obamacare is suppressing employment – business people will tell you that privately, if not publicly – but repeal is not being considered. Instead, they kick around hiring tax credits, imagining that a lousy thousand dollar tax credit is going to compensate the employer for years of much larger but uncertain new costs brought on by the health care mandate.

    Mostly I am angry and contemptuous of these “leaders” because they refuse to get their heads out of their […] or the 20th century or wherever […] their heads are at, and start to address the HARD work that will need to be done to fix our problems and move forward. Social Security and Medicare will have to be changed to allow them to provide for the most needy while reducing benefits to those who need it less. Obamacare is a poorly designed program which will simply NOT work and must be discarded; the problem will have to be addressed in more rational, market driven ways. Everybody is NOT going to be able to get free Viagra and doctor visits for every cold; we can’t afford it. Bullet trains, green energy projects and global warming fixes are all expensive jokes we haven’t the time and money for. We must devote our resources first to what’s ABSOLUTELY necessary and the rest of the wish list items will need to wait, maybe forever.

    I see no sign that Obama, any of the Democrats or most of the Republicans are ready to come to terms with this. That is why I am mad and contemptuous of these people. They are fiddling while Rome burns.

  • Clarity about what comes next is only useful in a command and control economy. In a laissez faire economy you never know what will happen next. Scary.

  • Ann is correct. Mises predicted this. Manipulating money just causes a concomitant debit or credit somewhere else. It is folly to think a group of really smart people can outperform the free market. Didn’t Hayek call that the fatal conceit?

  • Mr Lea,

    Some very good questions. But somehow I think you’re failing to grasp the wonderfully soul-chilling Spirit of the present Age. Here’s a suggestion if all else fails to work. Just keep chanting to yourself the following mantra: “Japan bad, China good, Japan bad, China good . . .”

  • “It is fun to curse our leaders and throw stones at them, but we should realize that cursing politicians will not create answers where none exist. Sometimes, cursing politicians is a way of whistling in the dark; by grumbling about how stupid and inept they are, we reassure ourselves that answers really do exist and that if more competent people were in office our problems would all be solved.”

    Alleluia. Once again a welcome breath of fresh air. And ditto for:

    “From the Via Meadia perspective, God . . . is telling humanity that it’s time to get up and go. The policy ideas and political methods of past decades won’t do anymore. We’ve made a new and more complicated world; now we have to learn how to live in it.”

    But why do I suspect that, among those past decades, four whose policy ideas may be least useful and most harmful to us all right now are those from 1970 to 2009? And here’s the irony of it: I can’t think of a decade in my considerable lifetime when folks were at least trying to do more getting and going than the roughly the past 10 years.

    Indeed, something tells me real recovery is going to require a very different get-up-and-go from that with which we began this century. At least, that is, if our “going” is going to get us anywhere truly different, and decent, and humanly bearable and sustainable. A kind of going which requires first of all that, yes, we stop, look and listen a bit more often. But also that we see our fellow-humans more nearly as Divine creatures in their own right, independently of our immediate utility. And not as animals or robots which have value primarily as – what’s the Sartrean (Heideggerian?) phrase? – objects and instruments of our intentionality. E.g. (to take but one example among many others), NOT merely as sources of bottomless consumer spending, such as is made possible by limitless home refinancing and other sophisticated, “wealth-creating” forms of debt. One conclusion I can’t escape is that, necessary to any real, meaningful recovery – notice I didn’t say SUFFICIENT, just necessary – will be a recovery of a basic sense of creaturely human dignity. I.e., God makes nobody and nothing by accident; nor does He make anyone by throwing clay against a wall and then watching to see what happens. In other words, every one of us has something in him or her that’s Divinely deliberate and irreplaceable – and quite conceivably even necessary – to the right constitution of the world, did we but only know how to coax and nurture it (hence the ongoing relevance of decidedly unquantifiable things like prayer and love). And while I don’t promise anyone immediate or measurable success in this coaxing and nurturing, as applied to the man with Alzheimer’s next door, or the woman in a coma down the block – or even the multiple-conviction gangbanger across the turnpike – here is one very, very promising place to start: With the people who work for us right under our noses, and particularly with those on whom we depend – often for dear life – for the day-to-day running of our operations (though we’d sooner bite our tongues to the bleeding-point than come anywhere near admitting it). And yes I realize nobody is irreplaceable. But must we keep rubbing their noses in it every half-hour of the day – why? just to massage our own egos? – until they finally walk out and leave us badly strapped for God knows how long? Not to mention (as happened recently to a friend of mine – and no, it wasn’t me who walked out) needlessly embarrassed in front of colleagues, clients and associates?

  • Jack McHugh

    No quick policy solution recipes, maybe, but we certainly know what “food groups” they should come from; the obstacles are political, not conceptual. On the U.S. (and Europe) competing in “Outsource World,” get government out of the way of innovators and entrepreneurs, and two words summarize how to do it: Smaller and less.

    On entitlements, just one word sums up the solution: Haircuts.

    On all those squirrely financial instruments and interactions, again just one word is needed: Transparency. You can’t take out six mortgages against the value of a house because the instruments are all recorded public records. That’s the direction we need to go on international finance, combined with a big dose of “caveat emptor,” and restoring “loss” as equally important as “profit” in a free enterprise system.

  • Greg Q

    “There are no simple cookbook recipes that policy makers can apply with infallible success.”

    I disagree:

    1: Put a leash on the EPA, and all the other environmental rule making organizations. Let the Delta Smelt and the Spotted Owl die of, let the water run to the farmers, and let the logging resume. Drop all requirements for “environmental impact statements”. Start drilling for oil in ANWR, and on the coasts. Eliminate the new EPA ozone rules.

    2: Put a leash on government unions. Replicate the Wisconsin rules everywhere.

    3: Put a leash on private sector unions and the NLRB. Let Boeing move. Force every union to get re-certified in a secret ballot election every year. Make every state a “right to work” state, and ban all closed shop agreements.

    4: Terminate ObamaCare.

    5: Eliminate every bit of “discretionary” spending added to the Federal budget since 2005.

    6: Make the Bush / Obama tax cuts permanent.

    That would get the economy going, and get the budget headed towards something that isn’t an utter disaster.

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