Speaking of language when I read this op-ed by Jared Bernstein in the Washington Post, titled “Technocrats know how to fix the economy. And they did”, I could only think in what what is he using the word “fix”? In the same sense that you have your dog fixed? That is, something that’s convenient for you but not necessarily for the dog?
What he seems to mean is that the ARRA (the “stimulus package”) ended the recession, that QE put the banks on a sound footing, and that the PPACA (“healthcare reform”) did something or other that he doesn’t elaborate on. Dr. Bernstein is an economist and I’m not but surely he must know that’s arrant nonsense. The recession ended before the first dollar was disbursed under the ARRA. If Keynesian pump-priming ended the recession, it was necessarily the stimulus put into place under the Bush Administration. That’s what the timing says.
As it works out I don’t believe that federal action had a lot to do with the recovery one way or another, that the banks are still in shaky shape, and that what we’re seeing right now is largely the result of lower energy prices. We certainly haven’t solved our economy’s many problems.
I am not sure what world Jared Bernstein lives in, but I assume everybody he knows has no worries. I am sure their stock portfolios are going gangbusters, but for the rest of us slobs, the stock market is a rich man’s game.
I keep hearing about the economy growing, and I guess that has something to do with the rich man’s stock profits because I do not see any growth.
If any Republican took credit for creating one of these low-paying, part-time, dead-end jobs, he would crucify them. If they even thought about taking credit, he would do the same. I am sure that my PE Investor buddy can dig up multiple quotes about him or others like him being charged with only creating these types of jobs.
The Recovery Act: People stopped borrowing because the financial institutions were no longer able to lend money to risky borrowers. This was because they were insolvent, but everybody was pretending that they were not. The financial institutions did not need credit instruments because they could not lend. Since the credit instrument need (demand) dropped, investment in credit instruments dropped.
Except in the most perverse sense, the problem was not a drop in demand and investment. The US is a credit junkie. Does Jared Bernstein propose to solve a heroin addict’s problem with more heroin?
The bailouts: See the previous paragraph. Also, the lending was ultimately going to go to the worst credit risks. The banks were sitting on loans made to good and bad credit risks. If the bad loans are being propped up and the good credit risks have no reason or cannot borrow any more, there are no more good credit risk borrowers.
The only people left to borrow are the bad credit risks, or new and exotic borrowers can be found. The later was the only solution, but he bitches about it. Furthermore, he bitches about a bubble forming in the financial sector, but apparently, he cannot connect the dots.
The Federal Reserve: When the heroin addict starts to get the shakes, feed the them more heroin. Student loans have been pushed to soak up the available money, and people are being pushed into inflated degrees like they were into inflated houses.
Of special note, this is not the evil Republicans, conservatives, tea party, or right wingers who cooked up these schemes. It was the big government loving Democrats. The financial industry is probably involved because they always are, but they are big boys.
Health-care reform: I have not studied the issue.
Europe: The EU and the euro are a disaster, and like most Americans, he is clueless.
From the link (third to last paragraph):
Possibly the underpricing has something to do with the foreknowledge that the government will come to the rescue. Apparently, he does not see anything amiss with these two sentences.
All that he does is unquestioningly spout the same nonsense that everybody else spouts. He wants to put his good knowledge to use, and as soon as it is wrong, he will forget he assured us it was correct.
Knowing that you were wrong is trivial. Knowing why you were wrong is critical to becoming right.