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July 21, 2011

DOOM, a limited-liability corporation


Apparently, Obama blew a big debt deal. What struck me about this piece was the passive-aggressive tone -- US News is completely in Bammer's corner, yet feels compelled to call him out on his lies. I'm seeing a lot of this kind of thing on the Left these days.

The end of the growth consensus. The relevant bit:

[P]olicy veered in a different direction. Public officials from both parties apparently found the limited government approach to be a disadvantage, some simply because they wanted to do more—whether to tame the business cycle, increase homeownership, or provide the elderly with better drug coverage.

And so policy swung back in a more interventionist direction, with the federal government assuming greater powers. The result was not the intended improvement, but rather an epidemic of unintended consequences—a financial crisis, a great recession, ballooning debt and today's nonexistent recovery.

Essentially, we decided to grow our government at the expense of the private-sector economy. Worse yet, we decided to debt-finance the growth with no plan to pay that debt off.

Wall Street is making Doomsday plans.

Dodd-Frank: Crony capitalism's triumph. Like ObamaCare, this is another law passed over GOP objections that just gets worse as more details come to light.

10% unemployment on the way. In reality, unemployment has been in the double-digits for a long time. The recent large-scale layoffs by Cicso, Borders Books, and now the United Space Alliance with the end of the Shuttle program (2,800 layoffs are expected) only exacerbate the situation. And most of these jobs are not blue-collar jobs; these are high-paying technical jobs that will be very difficult to replace in today's economy. Many of these laid-off workers are going to have a hell of a time finding work again at anything like the wages or benefits they were making before.

As Bill Gross notes at the Financial Times, economies cannot grow at "Stall Speed".

Annals of the boned: The good news? CalPERS got a whopping 21% return on their investments for the 12-month period ending in June 2011. The bad news? It doesn't come close to making up for the crappy performance for the five years prior to that. They still need a bailout. This is the grim truth of investment losses vs gains -- one bad year in the markets can take several up years to make up.

Greece (and maybe Europe as a whole) edges closer to the abyss. Fancisco Giavazzi and Anil Kashyap respond: Small enough to be allowed to fail under certain circumstances. A taste:

This plan would be unpopular in Germany and in the other stronger economies that would be the main contributors to the stability fund. A selling point would be that unlike the plans put forward so far, the taxpayers of contributor nations would be protected by collateral. If things go badly, the stability fund would effectively own the banking systems in the countries that don’t come up with a private solution. These assets would have value because they would be limited to those countries that are poised for growth.
Yeah, right up until the debtor countries nationalize the banks and leave the foreign collateral-holders hanging. The EU has done nothing but make this whole mess a huge moral-hazard sink-hole.

UPDATE 1: From the sidebar, "Layoffs Deepen Gloom". Obama has broken the mighty US jobs engine, and the results are going to be very bad indeed if we don't fix it pretty damned quick.

UPDATE 2: The bicycle overlords.

UPDATE 3: If this isn't a signpost on the way to DOOM, nothing is: Laura Ingraham's baggage robbed at NJ airport. (In Newark. I might have known. That joint is an utter pisshole.)

UPDATE 4: Via Andy: Not everything in the economy is in the dumper. Sex toy sales are doing just fine. Stay-cation, baby!

UPDATE 5: Paul Ryan brings the DOOM.

UPDATE 6: Keith Hennessey delivers the verdict on the "Gang of Six" plan -- it sucks.

The rest I'm getting is worth the crick in the neck I'm going to have when I wake up.

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posted by Monty at 08:54 AM

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