UPDATE: Skip to below the videos and FT article for discussion of Krugman and Delong. Also for background reading please see the following:
Coming Debt Crisis Means It's Now Or Never For The American Empire
---
We interrupt your Saturday morning for this important announcement:
The worldwide, pre-bubble, post-bubble fiscal policy of Extend, Pretend and Spend has been interrupted. The G20 ran into problems with the deficit-loving, super-galactic new world mantra. It was doomed from the start. You can pretend only when everyone plays along. Bond traders don't play pretend. Guess who won.
Your kids. All future generations. You and me. Celebrate with Kenny Powers.
---
---
Check out a gold nugget that has no tungsten:
G20 Drops Support For Fiscal Stimulus
Finance ministers from the world’s leading economies ripped up their support for fiscal stimulus on Saturday, recognising that financial market concerns over sovereign debt had forced a much greater focus on deficit reduction.
The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances. “The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability,” the communiqué stated.
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.
After the meeting, finance ministers acknowledged that the landscape had changed. George Osborne, British chancellor, claimed credit for the change. The new words were a “significant success in getting endorsement from the G20 for … a significant change in tone in the language on fiscal sustainability”.
Many other finance ministers accepted market realities had changed the G20’s policy, Christine Lagarde, French finance minister, said: “There’s a large majority for whom redressing the public finances is priority number one. For a minority, it’s supporting growth”.
Even Dominique Strauss Kahn, managing director of the International Monetary Fund who championed fiscal stimulus since January 2008, recognised the world was suddenly different. Asked whether he felt comfortable with the change in tone from the G20, he replied: “Totally comfortable. I am not the champion of fiscal stimulus, but the champion of right fiscal policy”.
But there were concerns around the G20 that the rush to reduce budget deficits, necessary though officials now thought it was, would undermine the recovery in the near term.
In a letter to the rest of the G20, Tim Geithner, US Treasury secretary, argued: “Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery”.
Ministers from many countries stressed the need for structural reforms to boost the potential for private sector growth.
In private, G20 officials said that the US had been the country most concerned about the new austerity drive and feared for the momentum for global growth. In the meetings it had been frank in the meeting in calling for China to revalue the renminbi and for Germany to boost domestic demand, officials said.
Mr Geithner, himself, was open about his fears in his letter to the G20. “Concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery,” he wrote, adding that fiscal tightening won’t “succeed unless we are able to strengthen confidence in the global recovery.”
---
Let's do a little list of the disappointed Keynesians:
Ben Bernanke
Larry Summers
Tim Geithner
Joseph Stiglitz
James K. Galbraith
The Deficit President
And all the kind folks at New Deal 2.0
---
The above group was wrong. We were right. Government stimulus would not work, I wrote in January of 2009, on the day of passage of the Deficit President's $800 billion giveaway.
Government stimulus has no multiplier. It crowds out private-sector investment and does not create sustainable job growth. Rather, government stimulus exists to keep bloated public-sector budgets from being cut back. It's a political tool to improve re-election chances, for the party doing the spending.
This is not a normal recession. Decades of debt and structural inefficiencies created this whopper. We can spend from here to Tokyo, and things will only get worse. You can't fix a structural debt problem with more debt. Idiots.
---
Below is some of what I've written in the past on Keynes and government stimulus.
---
Bush tried a stimulus of $150 billion--fail. Obama is trying a stimulus of $800 billion--and it will fail. Small tax cuts and inefficient spending programs (where 10% is lost through corruption, graft and waste) will not help an economy hell-bent on debt de-leveraging after a 2-decade sloth through easy money and credit.
The party is over. Turn in your hats. And stop destroying our children's futures with wasteful giveaways that serve no useful economic purpose. Keynes is and was a failure. We are broke and indebted to the tune of $12 trillion. We are in a deserved period of contraction. Allow the deleveraging to take place, encourage massive cuts by bloated states and municipalities. Adopt the New Zealand mindset (make sure to read this one) that we should use the global downturn to restructure our governments and spending so that we are ready to compete strongly again when the dark days are done. For heaven's sake stop trying to keep the party going with cheap booze and even cheaper hookers.
---
"The stimulus package was too small." AAARRRGGGHHHH. Give it a rest. Outside of the Obama White House and the panoply of glad-handing, sycophantic Keynesian drones led by Krugman and Delong, no one buys this crap. As Peter Schiff put it, Keynes is to economics as witch doctors are to medicine.
Krugman, Tyson, Summers, Delong and Romer are live together on Fantasy Island regarding Keynes, government spending, stimuli, economic multipliers and the like. Their duplicitous theory, while weakly functional in a perfect recessionary environment, is completely useless in this crisis.
The stern backdrop of Barry Bonds like debt to income, and debt to GDP levels (345% vs. a career average of .345 for Bonds and not coincidentally, both ratios are inflated by steroids), means that consumer behavior will be different than their models predict.
So I despise them for this, because they're stealing my money and your money and your kids money and so on, all so they can try to mollify the effects of a crisis that can't be mollified. This is our pot and we need to piss in it. There's nothing that can be done.
Thank goodness for sane voices in a sea of rampant stupidity. And Krugman, take some time out from your media schedule to adjust your models for the new reality.
And while you're doing so, add this mantra to your to-do list: Recessions are NOT evil; they are a natural part of the economic cycle. Stop trying to prevent them with uselss theory and generational rape. We have had enough.
---
Has anyone else had enough of this clueless, Keynesian claptrap. Wake up Washington. Belief in Keynes is belief in utter self-delusion. Keynes to economics is a witch doctor to medicine. It's bogus, P.T. Barnum, boonschwaggle.
The economic cycle has an innate beauty--growth and recess...allow it to flourish. Recessions are necessary and unavoidable. Look at nature. When Fall comes, we shed our old leaves, prune back, and prepare for Winter and eventually a new Spring where growth flourishes again. The Bush-Obama administration seems hell-bent on making sure our tree stays (soylent) green through an ice age. It won't work and it's not smart.
---
Brad Delong And Fellow Keynesians Want $6 Trillion In Stimulus
Sadly, this is not a joke. The discussion of possible Bernanke replacements has already begun, and Brad Delong is positively giddy about the prospect of a new and improved Fed Chairman willing to do $6 trillion in monetary stimulus (quantitative easing through the purchase of longer-dated Treasuries) between now and October.
You read me right. These shameless political econo-trolls (Keynesians are more politician than economist as they advocate massive spending as a means to win elections, all notions of fiscal sanity be damned) are more dangerous to your children than any other form of human species. They would gladly sacrifice $6 trillion to keep their party in power.
The seemingly benign task of reading their polluted machinations sends me into near apoplexy. I have no words to express the disgust I have for these creatures, who would suggest we mortgage your children's future via absolute dollar destruction, so that their side might retain a few more House seats in November.
Without words, I will resort to the only thing I have left: raw emotion. F*ck you Brad Delong. You are the most irresponsible, despicable Keynesian econo-troll I have ever come across, including your cousin Krugman. May you and your kind (Keynes) lose power and may you personally get buried under 2,000 pounds of Ding-Dongs inside your Berkeley headquarters. And do not share the processed chocolate delights with your soulmate Christina Romer, as she, like you, has had plenty already.
It's a short term fix (that would boost jobs only in the near term) that is shamelessly political in nature, and is outlandish even by lax, econo-troll standards. Gagnon and Delong would obviously do anything to see their side win, and in a just world, the mere suggestion of this idea really ought to disqualify them from ever being taken seriously again.
---
Obama Stimulus Is Generational Rape
Also missing from the debate is the concern for our children and the unconscionable debt burden we are leaving them. Keynesians, what value are you adding? Your insane belief in the power of government spending is painful entertainment for the rest of us who can smell the bull the minute you hit town. Where is the grand vision? Where is the vital infrastrucure? Why do these projects merit the borrowing of $1 trillion more from our children's increasingly dim futures? We're still waiting to hear how each project will further our national interest.
So stop wasting our time with your useless theory on how this giveaway will substantially boost the economy. We're not buying it. It didn't work in the 1930s and it's not going to work now. Are you listening, Krugman. The massive spending that accompanied our entrance into WWII brought us out of the depression. Not the keynesian claptrap you so proudly cite.
So call this stimulus what it really is, generational rape with a trillion-dollar shovel, and it's but one more painful wrong turn as we continue on the path to federal bankruptcy.
---
DailyBail