Insanity in individuals is something rare — but in groups, parties, nations, and epochs it is the rule.
John Lennon famously once said that life is what happens while you are busy making other plans. That was good advice for sure, and his own death is a clear example. We do not know how long we are going to last, and must avoid reproducing the pattern. The best lesson of history, is that we human beings fail to remember the very same lessons of history. We’ll try otherwise, but I am not optimistic.
Paraphrasing the maestro, if you think you understood what I am saying, you could be wrong. Nowadays I am not sure of anything, except debt unsustainability. I often conclude I end up twisting and turning all arguments when theorizing on the economy or life -just like a central banker. I worry I am so obsessed with Central bankers, that I am even changing my personality tics. ¡I sound like Greenspan! I promise it hasn’t been like this all the time. When I was young, I fantasized with beautiful women just like nearly every other male. More thinking, and less sex, is the way you ensure you become at least as old as your birthday date can attest.
In my particular case, I have to be particularly watchful about allocating a disproportionate amount of time to the most prescient analysis I can reasonably achieve, and forget to live in the meantime. Drinking, singing or sailing (and all other “ing'” that are sinful or enjoyable) are more important than the dissection of the malfunctions of our economic system.
In this line o thought, I was actually thinking of rounding up the current state of affairs in the global village. After reading Roubini’s last post at Marketwatch, I decided to leave the update for a later time. We all seem to keep on talking about the same things, with a monotonous result. My wife says so, and she is always, by definition, correct.
The last fad is finding new superlatives for the last series of desperate efforts by brainless politicians to balance the boat. Like critizising predictably predictable Jean Claude Juncker, and his latest insane, no money, more debt, free lunch, investment plan. Or underscoring the fact that Kuroda et al are increasingly out of their minds. But it can also be about Christine Lagarde’s or Summer’s new terminologies for El Erian’s “new normal” (rebaptized as secular stagnation or whatever).
Theorizing on the different possible mixes of monetary and fiscal policies tops the list. As of late, we have found a brand new reason why macro policies implemented in the OECD over the last couple of years got it wrong. Not only do we need to increase the dose, but we have to change the policy mix. I think the closing paragraph in Roubini’s latest article in Marketwatch sums it all up. That’s it, the cocktail was long of gin and too short of tonic and lemon.
“The right policies — less fiscal austerity in the short run, more public investment spending, and less reliance on monetary easing — are the opposite of those that have been pursued by the world’s major economies. No wonder global growth keeps on disappointing. In a sense, we are all Japanese now.”
For once (I will try not to make a habit out of this), I quite disagree with Nouriel. We can discuss all night what came first, the chicken or the egg. By the way, I stand for the latter. But we will miss the point. The problem is not the keynesian mix, but the keynesian approach in itself. Continue reading