Larry Summers (right) effectively quit the White House yesterday, shortly after the Fed’s Bernanke announced that the Administration would be doing some er, um and ah, although not necessarily in that order, and only in due course maybe depending on whether the er-um-ah tactic seemed to be necessary, or not – as the case might be.
The feedback from the one US Slog source who’s made any sense over the last few weeks is that just as Obama has difficulty in choosing and then appointing folks, he has even more trouble deciding which advice to take. It seems fairly clear that the Secretary Clinton/Geithner axis is now pretty much in charge of the dominant policy area, viz, OhmyGod it’s gonna be just Awful.
Our mole in these matters feels that Summers is a QE2 hawk whose general view is “Screw the Chinese and the Republicans, let’s chuck money at it”. The Summers line in private has always been that QE1 was nowhere near bold enough. Others think there’s a degree of Cleggist rewrite in that one. Either way, QE1 didn’t work – and it was his baby. So now he’s history.
Meanwhile, on Monday the National Bureau of Economic Research declared that the recession which began in 2007 ended in the middle of 2009, making it the longest downturn since WWII. Back on earth, recessional technicalities were getting low scores in the unemployment lines now stretching all the way back to the nearest house repossession.
This isn’t a recession, its a restructuring. It started to show up around 2003/4, but Alan Greenback decided to put it off. Taking his example, the credit-scorers started to put it off some more. Following their example, the EU’s central bank decided to extend the policy to its sovereign members. Now read on.
Just over a week ago, The Slog forecast a currency war was about to start. Yesterday America’s Peterson Institute advised the Obamites to declare all-out currency war on China. As advice goes, that must be up there with the worst so far this century: as it has already shown, the People’s Republic is holding all the cards in that poker game.
Growth isn’t going to be restored in America – or indeed anywhere in the West – any time soon. But that doesn’t win mid-term elections, and so OCarter must say something else. He just didn’t figure out what it is yet. He’s thinking, maybe, ‘Growing by getting smaller’. It’s work in progress.
We are constantly told by our media, governments and banking institutions that we must buy, consume, borrow and thus grow….as if growing was for us like moving for sharks: stop doing it and you die.