Sifting through the data coming out of the financial world, it's easy to feel like the calm has come and the sun is about to rise. Every chart that's depicted has something nice to say, every new number points to increased confidence.
I've still felt like a sceptic more than once. And I've got Clive Crook in my corner! In a sort-of reality-check piece on Bloomberg, Crook says that, "The condition of the world economy, you might think, is serious but stable. Actually, it continues to deteriorate."
I've still felt like a sceptic more than once. And I've got Clive Crook in my corner! In a sort-of reality-check piece on Bloomberg, Crook says that, "The condition of the world economy, you might think, is serious but stable. Actually, it continues to deteriorate."
He's right. Look at the numbers all you want but just imagine how little has been done anywhere save monetary policy. Imagine what the global economic outlook would be without "reckless" QEs. It's not a great situation, to be stuck between the devil and the deep sea but that's where we are.
Monetary policy is the domain of independent technocrats - distinguished academics (in most cases) - who function without the horrible burden of being answerable to voters. Fiscal policy is entirely the realm of people who are elected by us. Crook gets it spot on when he judiciously states that, "Compare this with fiscal policy, the realm of elected leaders. It’s in shambles both in the U.S. and Europe, albeit in different ways. What governments ought to do is conceptually simple: Maintain fiscal support for lower-than-normal economic activity in the short term, while announcing plans -- detailed, credible plans -- to strengthen public finances over the longer term. It hasn’t happened."
Europe's political structure is incapable but it's also predictable. After all, these are sovereign nations bound by a monetary union, not a fiscal one. What's been the most shocking to see over the past few years is the extreme polarization of the American polity. The divisiveness, derision and lack of respect shown by both parties has hurt the average citizen the most and will continue to do so in the future.
The patient may be showing signs of recovery but it's more likely that the internal sickness is worsening. As long as the politics is dysfunctional, nothing will ever get accomplished. Leaders are failing everywhere and I don't think the reaction to this void is strong enough. To be honest, it is a pretty bleak scenario after all.
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