Federal Reserve: Has lost much credibility for helping to cause the crisis, for their bailout of Bear Stearns, for sending inflation higher, and for the crumbling dollar. If we were being fair, they should get kudos for re-liquifying the system during the crisis. But they under increasing pressure, face possible audits and other threats to their independence. After QE1, QE2, and now QE2.5 (rolling reinvestment) there is no appetite for another round of Fed easing.The US has loaded the gun and pointed it to its head and is yelling "don't move or I'll shoot!" What an insane mess they have created for themselves.
Congress: The legislative body in charge of taxing and spending seems comfortable with their hardened partisan positions, and few accomplishments. Indeed, as the LATimes has noted, the 112th Congress is one of the least productive in decades. Job creation is not going to come out of anything that Congress does. We are more likely to see counter-productive Austerity measures, based on the experiences of Great Britain, Portugal and Ireland.
GOP: I have consistently criticized the Republicans for a) magical thinking despite proof otherwise b) hypocrisy in creating the deficit under Bush but crying about it under Obama. Not interested in anything in terms of jobs.
Democrats: Their inept, uninformed understanding of economics, messaging, and markets is beyond my comprehension (Austan Goolsbee being one of the rare exceptions). Apparently incapable of anything involving jobs.
President Obama: Needs to figure out what his economic plan is, how to interact with the GOP, and whether he will abandon his base. His hands — and brain — seem to be completely tied when it comes to anything involving jobs.
Given that historical backdrop, and the major players tied up in knots (and nots), it is hard to see how the job picture will improve anytime soon.
Friday, July 8, 2011
The US Economic/Political Predicament
Here is a bit from a post by Barry Ritholtz that nicely summaries the economic and political mess the US has created for itself by its idiotic policies, its incompetent politicians, and its clueless "leaders":