Policy gimmicks won't fix what ails us
Last night鈥檚 was nothing short of a travesty, a decisive and freakish reminder that America has been taken deeply down the worst possible path.
While somewhat surprising, I suppose it just makes sense that both the Federal Reserve and the Federal Government have simultaneously lost all credibility and that both are seemingly exhausted of policy tools.
When the window of reality opened briefly in 2008 with colossal failures and crisis in every direction, many Americans got a brief and uncomfortable sense of what it feels like to be truly concerned about their current wealth and future prosperity鈥� a sharp contrast to the heyday of the housing boom era where levering up on residential real estate was all the rage.
With a host of broken, deteriorating and dysfunctional markets, stocks down over 50%, a few notable public bank runs and several earth shaking 鈥渂uck breaking鈥� money market events, the Feds panicked and abruptly snapped into a mode of propping and bailing using creative accounting trickery, blanket guarantees and boat loads of massive Keynesian boondoggles.
What we are now seeing, I believe, is the clear recognition that the propping and stimulus action was an unmitigated failure and further that the political process and institutions that brought us these 鈥渟olutions鈥� are as weak and phony as the 鈥渞ecovery鈥� they attempted to manufacture.
revealed this somewhat in his recounting of events of the past few years and his recognition that the massive housing slump has made all the difference to the severity of the recession and the lackluster 鈥渞ecovery鈥�, a fact that the Federal Reserve appears to have underestimated at every turn.
With a litany of platitudes and talk of the 鈥渆nduring strength鈥� of the American economy, Bernanke concluded his speech by assuring listeners that the long term prospects of the U.S. economy does not have to be materially affected by the ongoing financial crisis so long as we take the necessary steps to 鈥渟ecure that outcome鈥�.
President Obama did no better last night when he outlined a list of futile fiscal policy gimmicks that could have been borrowed right from the 鈥�American Recovery and Reinvestment Act鈥� a 2009 policy action carrying over twice the supposed Keynesian punch that we all know did little to nothing to build a durable long term recovery.
It鈥檚 over folks鈥� By hook or crook the Feds did their best to reassemble our Humpty Dumpty economy but it can鈥檛 be done鈥� you can鈥檛 paper over the serious mistakes made by millions of households or the bad policy created by generations of Washington DC vote peddling hucksters.
