http://www.msnbc.msn.com/id/21134540/vp/33854315#33854315
“Both sides are missing the key fact – the US economy needs structural change that requires a new set of economic tools.”
“What bothers me is that we seem to have two policies. One is we put the pedal to the floor on Monetary Policy, which boosts up asset prices… they’re going up again. That’s what created The Bubble. Then we get a crash. Then we adjust to it. And what have we learned? We’re doing exactly the same thing now as we did between 2002 and 2007 - exactly the same thing.”
“We’re back to the same policies. We spent two or three years bemoaning the fact that Greenspan had kept Interest Rates at essentially zero and allowed such a misallocation of Capital, that we ended up with a crash. Now we’re doing it exactly the same way. AND THE REASON IS THAT OUR ECONOMY IS JUST NOT PRODUCTIVE THE WAY THAT IT IS STRUCTURED RIGHT NOW.
We’re not creating truly productive jobs. Just giving tax cuts or the ‘Cash For Clunkers’, which in my view has to be the worst idea imaginable – we’re going to smash up cars, so that we can buy new cars. Is this really the best we can come up with?”
“All they are thinking about is how do we get back to where we were, not where do we need to go. And I think that’s the problem, actually… Congress isn’t going to figure it out. You know, they are completely in the hands of the interests that want to go back to where we were before.”
“We are in sloganeering and we are bouncing back and forth between outmoded ideas and we need, I think, something new.”
“We can’t pay for the absolute minimum core of Government right now and we’ve got a lot of other stuff to do. We have science and technology and roads and power. But right now, our tax dollars barely cover just the Interest on the Debt, the Military spending, the Health Care, Veterans’ benefits, Social Security . ALL THE REST OF GOVERNMENT IS ON BORROWING RIGHT NOW.”
“If you are going to spend $800 billion, you need to think about it (the “Stimulus Plan”) and not just make it a grab bag - which it absolutely was this time… It did not have a structure. It did not really have a plan, a philosophy and so forth. But we’re still in that situation. I think this kind of Government by back room Congressional negotiation doesn’t work, when you really need to make change. That, I think, is what it comes down to.
There are a lot of Interests around. They are very powerful. Finance – look at what the Banking Sector is doing in gutting Regulatory change. Look at what the Health Care Industry is doing in preventing any really substantive change in how Health Care is being delivered. Look at what’s happening with the Energy Sector pocketing whatever they can out of this Climate Change that is working its way through. Hundreds of Billions of Dollars of subsidies given to Utilities in a back room. People aren’t even aware of it.”
Do you wonder why I am buying Gold? Gold is working its way towards parity with the Dow –
But these strong Interest Groups also are leveraging Washington to pump up asset prices. That is why I hold my nose and buy Stocks and economically sensitive Commodities. My job is to protect Real Purchasing Power against Inflation and a falling Dollar. The printing of money is an enormous risk to Real Purchasing Power.
No Goldman is now writing notes that Stimulus 2.0 is a near certainty…
http://www.zerohedge.com/article/goldman-why-second-stimulus-merely-months-away
If you want to see the definition of “a misallocation of Capital”, then look no further. China has built a city for 1 million people, and nobody lives in it – “gleaming buildings built with government money stand empty”… Well done.
http://www.youtube.com/watch?v=0h7V3Twb-Qk&feature=player_embedded
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