SeekerBlog

I’m glad I’m an optimist. Otherwise such insights as David Goldman’s on the future ability of USA/UK to sell sovereign debt would make me loose sleep. David concludes today’s analysis:

…Nonetheless, there is only so far that the bandaids can stretch. For the US government to spend more to bail out states or industries or banks, it must persuade the Fed to extend its balance sheet, which means that eventually America itself will be in the same position that UKalifornia is in. Governments will have to cut spending, which means that consumers will cut spending, which means that the economy will crawl along its L-shaped recession path indefinitely. [From UKalifornia, or why there’s never going to be a recovery]

“Never a recovery” is the Japan scenario. If innovative Fed actions can turn this around I ‘m optimistic Bernanke will go for it. OTOH, if Richard Koo is correct, then massive fiscal stimulus is the only government policy that will be effective.
OTOH, is Thomas Sowell correct? That we just need to give all the politicians a year off so they can “do nothing“? Fatta chanca.