Courtesy of Karl Denninger of The Market Ticker
back to academia where he can indoctrinate kids with his BS, having failed in DC:
Austan Goolsbee, one of President Barack Obama’s longest serving policy advisers and the chairman of his Council of Economic Advisers, leaves his post pretty much as he inherited it: with the economy moribund, no clear path to vigor in sight and the unemployment rate stubbornly elevated.
More than ever, the atmosphere in Washington seems so laced with toxicity that policymakers have largely given up merely debating how to spur the economy, cognizant that any approach will be deemed politically impossible.
The root problem is that we’ve refused to look at the underlying rot that led us to the mess: EXCESSIVE LEVERAGE.
Instead of allowing the "just desserts" to visit upon those who engaged in these acts, including the automakers, the banks and others, the Administration and Congress has bailed out literally everyone with monstrous deficit spending:
That’s 10-12% of GDP for three years running.
But that bandaid doesn’t fix anything. It allows some people to continue to make payments on insoluble debt for a while, but only by borrowing more money to pay that which can’t be financed. Such a scheme must inevitably fail as nobody’s credit capacity is infinite. If you attempt to get around that fact with currency debasement you eventually kill yourself anyway, as rising prices cannot be circulated into wages (without instantly "un-doing" the stimulus) and as such the very same consumption deficit shows up through that debasement.
So runs the narrative among those inclined to accuse the administration of failing to marshal an adequate response to the strains of the Great Recession, setting aside plans to put Americans back to work via government-financed projects in favor of scrimping to shrink budget deficits.
Bah (again). Had the Administration financed projects while at the same time forcing the big banks through bankruptcy, we’d at least have gotten something for our deficits. Instead we simply paid banker bonuses. While that money got spent, and did support GDP, it contributed exactly nothing to the common benefit of the nation and the balance sheet of consumers and businesses.
“I don’t see why anybody’s playing chicken with the debt ceiling,” Goolsbee said in January during an appearance on ABC’s “This Week." “If we get to the point where we damage the full faith and credit of the United States, that would be the first default in history caused purely by insanity.”
The insanity came from bailing out the banks, which we now know, exactly as I predicted, would not result in them clearing their balance sheets and ultimately clearing the market. Instead they did exactly what happened in Japan – hide, extend and pretend, leaving the economy with its insoluble debt and in fact adding to it.
There’s been no credit demand recovery among consumers either – the only place you’re seeing it is in student loans, where the banks and colleges have turned to exploitation of our youth – the only suckers that are left who can be screwed.
Goodbye Austan and good riddance.
Now about those foolish kids who get suckered into blowing money at University of Chicago listening to this clown…..
