24 May When China has to tell you to knock it off
Yu Qiao of Tsinghua University: “Most of Mr. Obama’s stimulus spending is devoted to social programs rather than growth promotion, which may exacerbate America’s over-consumption problem and delay sustainable recovery.”
As Dr. Woody Brock pointed out recently, why are we not reading this from Larry Summers or Christina Romer? “Have the best and brightest once again lost their moral integrity? Seriously believe that more transfer payments to Democratic Party special interest groups is what the nation needs in its hour of distress?” Indeed, the $3 trillion of discretionary stimulus over the next five years is more than just economic foolishness – it is a “moral travesty”.
There is one thing, and one thing only, economic policy-makers should be focused on right now: Lowering national debt as a % of Gross Domestic Product. In other words, they can grow the economy, or they can lower the debt, and obviously, the real option is to DO BOTH, but everything else is a side-show. We are in an economic position so precarious that it is remarkable that more people are not screaming from the hilltops (my assumption is that many people probably are, and the media’s camera batteries ran out). But we are right now implementing a two-fold economic program: (1) Hinder economic growth everywhere possible by nationalizing industries, demonizing employers, taxing people into oblivion, cap & trade idiocy, national heath care debacles, and a general rhetorical lambasting of growth and prosperity; then, (2) Put the national debt into a place that we could have never, ever, ever believed it would be in the worst possible of scenarios.
I do not think it is politically feasible to do as many things about #2 as I would like to see in “Dave-land”. Therefore, it becomes crucial that #1 receive due attention, and now. The reality is that the very best execution of what is needed may fall short. But right now, we are in a ditch, and we are digging faster and harder each and every day.
Debt as a % of GDP. I am not being in the least bit melodramatic to say that this is going to be resolved one way or another; the question is whether or not utter collapse will be required to address it. Perhaps if Washington D.C. would listen to the moral stalwarts in China, we would be better off. God forgive America for electing this man President.