This page has been archived and commenting is disabled.
Guest Post: We Cannot Afford A Double Dip
Submitted by Alex Daley of Casey Research
We Cannot Afford A Double Dip
Talk of a double-dip recession is seemingly increasing these days.
Home sales have dropped like a brick since the end of the special tax
breaks for buyers. Weekly job reports are showing much larger rises in
unemployment claims than previously expected by whoever it is that
decides what exactly is expected – 427,000 new filings in just the last
weekly report.
The problem this time around, however, is not just the economy itself.
The problem is that our supposed saviors are all out of tools to help
the economy climb out of the deep, dark hole we now find it in. The
tool belt of any monetary regime is limited to begin with. Nothing more
than loosening up the debt purse strings with unrestrained interest
rate policy and some additional lending from the central coffers to add
to liquidity. These tools are the economic equivalent of performing
reconstructive dentistry with a sledgehammer and monkey wrench,
effective but not exactly precise.
And as Goldman Sachs recently pointed out to a number of its clients,
the world’s leading developed nations have all but exhausted the few
tools available to them:
Interest rates in the top 10 economic nations are hovering just
above zero, and it’s not like they can go any lower than that, as much
as banks would welcome having to pay back less than they borrow.
And government net lending has increased so dramatically that
government debt is spiraling from out-of-control to just plain
ridiculous. All at a time when revenues are dropping from the slowdown
and creditors, having been burned a little by Greece and afraid of
what’s to come with Spain, Italy, Ireland, California, New York, and
others, are starting to raise red flags to the borrow-and-spend
policies of our collective governing bodies.
For the first time in a long time, developed governments in Europe and
the U.S. face the specter of sub-AAA credit ratings and rapidly rising
costs of borrowing more (ratings that, frankly, had they been put in
place by the inept agencies years ago when they were initially deserved
may have had repercussions that would have helped us avoid many of
today’s problems). Between rising borrowing costs, the already hefty
budgetary burden of paying prior debt interest, and the ever-expanding
rolls of government employees, legislators can hardly keep up on the
bills these days, let alone inject any more into the economy.
The irony, of course, is that by unloading a full clip from the assault
rifle when trying to “save” the economy, the governments of the OECD
nations have actually created a catch-22 situation. One wherein they
not only have no tools left to manipulate the markets against a further
slowdown, but also where they have created monetary policy so extreme
that undoing it would be more disastrous than the fallout would have
been had they not stepped in in the first place.
Austerity budgets from Greece and Spain have included massive layoffs
of government rank and file, severe wage cuts, or both, potentially
reducing tax revenues and consumer spending. California is following
suit with its proposed 23,000 teacher layoffs, which are arriving on
the back of 30,000 previous layoffs just last year. New Jersey is
furloughing tens of thousands of state workers and capping raises. NY
is furloughing 100,000 more and needs to cut $9.2 billion from the
budget still.
As the walking bankrupt states and cities continue their budget
slashing – down from criminally high levels such as Miami, where the
average city worker nets $76,000/year compared to the $29,000 average
for private citizens of the metropolis – it will only exacerbate the
returning slowdown. Fewer households with cash to spend in the private
sector. Rising mortgage defaults and foreclosures as the workers face
the grim reality that a state paycheck doesn’t come with a 30-year
guarantee these days. Declining tax revenues at all levels. And more
people on the already busting-at-the-seams federal unemployment files,
which remain at all-time highs.
Speaking of the U.S. federal government, their guaranties of Fannie and
Freddie Mac loans are now estimated to cost anywhere from $250 billion
to $1 trillion to taxpayers in the end, far above the net cost of any
of the other bailout measures and potentially more than is possible to
pay. The price tag is so steep, many conservatives are starting to call
for repealing the institutions’ charters altogether and letting the
private market have at them. The U.S. federal government is simply
buried over its head in obligations.
The government is all tapped out. And yet the economy continues to slow.
If you are among the camp who wished the government would have never
stepped in to begin with and called out the seemingly obvious truth
that they could only worsen the situation by flailing so wildly to
contain it – the double dip is coming, and you are about to be proven
right and get your wish at the same time.
It’s the price we are all about to pay for letting our politicians get
away with budgetary murder year after year, including letting them try
to “save” us the last time around.
»
- 9778 reads
- Printer-friendly version
- Send to friend
- advertisements -
We can't afford a double dip? We shorts would love to see one if the gov't would stop artificially propping up the equities market.
We cant afford shit.
Political douchebags just give it up already. The piper is gonna get paid , may aswell get it done asap or the blood sweat and tears is only going to be greater.
Tyler, you got any predictions on tomorrows GDP growth numbers?
Let's Start a Pool on GDP
Buck a square...
Oh wait, devalued Bennie Bernank-ster Bucks...
$30 Bennies a square or 1 oz. silver blank...
if the GDP growth comers out lower then 1.6% it's over and the markets will tank for months. Anything higher will provide fuel for the markets.
My guess: 1.15%
I doubt the revision would come out that low. However, it doesn't really matter because the figure is annualized, meaning it does not accurately represent the quarterly growth, but is an extrapolation on what it will be on the year if the level of growth is the same over the next few quarters. So in reality it is just about 0.75% quarterly growth.
Better than expected.
And ... supercalifragilisticexpialidocious!!!!!
I wish I had these "yum yum's" jobs predicting what is gonna happen just right down the road...
Come on 1061.5, come on!
Taken care of! Let's see close
Rats.
And if the double dip happens, my sentry will be placed strategically to all the potential looters...
http://www.youtube.com/watch?v=3Ho4zowaaXI
And if I run out of ammo in the sentry, I've hired mercenaries..
http://www.youtube.com/watch?v=aBivZBxAF0Q&feature=related
Just watched "The Book of Eli" last night and had no idea what the movie was about when starting to watch it. By the end, I realized that the future for all of us is depicted in this movie. Scared the shit out of me and I do have weapons. Yet, I did make the comment that I do want to get one of the knives Denzel had. Just in case it becomes hand to hand.
I couldn't finish The Road. The cannibal house was too much for me.
That's probably the worst part of the book. I'd recommend you go back to it and finish it. It's still not a happy tale, but worth reading.
Careful what you wish for, you might actually get it!
As a nation..we cannot afford NOT to have a depression.
Very true!
A whole generation has grown up becoming accustom to not experiencing any nationwide crisis, and see all crises as optional: something the government can always fix. They got a rude awakening coming! An economic depression will humble a lot of people and bring them back down to reality.
I think it's been much more than one generation. The last generation of Americans to actually understand the world was the WWII/Great Depression generation. Their children, the boomers, have always way over-estimated their ability to change mankind and the world. Gen X was a bit more realistic than their parents, but not as grounded as their grandparents, and Gen Y never had a chance once they hit the propaganda mill we call the modern school system.
Excuse me, but wasn't it the WWII generation that started demanding all these entitlements in return for their unselfish "service" to country? None of this shit began with boomers who were taught by whom? Uh, yeah, their parents.
Noah,
No unfortunately it was put into place by Progressives,(just another term for Socialists/Marxists (TR, WW,& FDR).
You are right on on the Boomers, they just played by the rules already in place, and paid,and paid,and paid.
And....we're ALL still paying...............
Why do people forget "The Silent Generation"? Older than the boomers, but too young to serve in WWII, they created mass media, the explosion of the pop music culture, and benefited the most from the post-war boom in benefits accumulation. The meme "Greates Generation then Boomers" is simply revisionist. The Silent Generation had the deal of deals.
Ouch!
I come back from dinner to find I've been jumped on! Heh!
I never claimed the Greatest Generation was perfect, only that they were the last American generation to experience the vicissitudes of the real world -- all who have followed lived (comparatively) sheltered lives, coddled by the riches the Greatest Gen built.
three,
Er', scuse me.............too broad a stroke bro.
" the boomers, have always way over-estimated their ability to change mankind and the world".
No, just the Dope smoking, LSD tripping Left wingers Boomers, who were all about L_O_V_E, FREE Love...............and FREE $$$$$$.........always at the expense of the worker Bee's.
Then, they grew up, and decided to use OPM to do the DIRTY.
Yeah.. Thank God they fought the terrorists for us.. ohh sorry.. I mean Communists.. Ohh.. sorry.. I mean Nazi's.. yeah.. that was the boogieman of the day back then..
Give me a break.. Every generation has been niave since BEFORE the 20th century.. This country has been going down the shitter since the FED came in with the INCOME TAX !
1913.. the year this country changed forever..
The spoiled brats need it a good dose of reality.
Let's coin the slogan:
i-WORK not i-PAD
To Avoid a Double Dip, Ignore Nouriel Roubini by John Tamny | Real ClearMarkets | June 22, 2010
http://www.realclearmarkets.com/articles/2010/06/22/to_avoid_a_double_di...
Economist of the moment Nouriel Roubini continues to profit from the attention that has resulted from his alleged prediction of the 2008 financial crisis. The problem for Roubini is that if looked at objectively, the '08 crisis wasn't financial, and his prediction simple luck.
It was luck given the basic truth that no one, including Roubini, could have predicted the global government response that truly authored the crack-up. Contrary to his view that the moderation of housing was the crisis, the greater, historically accurate reality is that the global rush to housing driven by weakening currencies around the world was the recession. And when the markets started to correct classical Austrian malinvestment whereby limited capital flowed into the proverbial ground, the global economy began to heal; its rebound thwarted by government intervention.
But the crisis itself was the intervention. Far from financial, it was a government creation (something Roubini never forecasted) thanks to gargantuan mistakes being bailed out which disallowed the natural cleansing of the financial system. Short sellers were subsequently abolished, thus removing downside protection from the markets, and then worst of all, investors had to price in a future of muscular government involvement in the global economy despite the obvious fruits wrought by economic liberalization over the previous thirty years.
Roubini predicted none of this. Instead, he remarkably called for a stimulus package triple the size of the one President Obama foisted on the economy, and then later on told the Wall Street Journal that U.S. banks should be nationalized. Not only was Roubini's ill-gotten reputation made by the very government intrusion that he advocated, his post-crisis musings, if implemented, would have made a bad problem much worse.
Apparently unwilling to go gently into the night, Roubini continues to dine out on status that's been falsely elevated by something he didn't predict. Just last week he penned a widely read essay on how the global economy can avoid a double dip. Here's hoping he's ignored, unless of course we want further economic hardship.
Roubini's general contention is that if governments "take away the monetary and fiscal stimulus too soon – when private demand remains shaky – there is a risk of falling back into recession and deflation." Rarely has a mere portion of a sentence been so pregnant with falsehoods and misunderstandings.
First off, there's no such thing as fiscal stimulus of the spending kind. Though it's well known at this point, governments can only spend money they've first taken from the private sector. In short, governments can at best merely steal demand from certain economic sectors in order to fund generalized waste and a bigger state. There's no economic growth to speak of here.
Secondly, it bears mentioning once again that no act of saving ever detracts from demand. Roubini's suggestion that governments must spend when individuals don't defies basic economics. Indeed, short of stuffing dollars/pounds/euros/yen/yuan under mattresses, when individuals save, their funds are either shifted to others with immediate consumptive needs, or lent to businesses eager to grow.
Considering loans to businesses that result from reduced consumption, everything we have today is the result of past saving. Entrepreneurs can't innovate without free capital, and as such, we have Apple, FedEx and Wal-Mart today thanks to the past willingness among individuals to forego consumption in favor of saving. If Roubini's logic is applied here, governments would confiscate limited capital in order to fund government growth. ... read more at link
Horse hockey. The relevant reserve ratio destroys this argument. Lending based on $10 for every $1 (in effect from 1913 through about 1998) has proven safe. Lending based on derivatives-juiced $30 for every $1 in savings has proven fatal.
Absolutely.
And I find it hard to even classify those complicated, lethal derivative bets done in deals created behind closed doors without even a remote awareness by investors ats to the risks let alone the lack of capital involved as “savings.”
Therefore, Tamny’s premise, IMO, stands correct: “everything we have today is the result of past saving”?
And, regardless of what the Fed’s amazing comic book guide to inflation, The Story of Inflation, says about reserves,* according to figures provided about three years back by Prudent Bear, the Fed was keeping about 1/4 of 1% in deposits as "fractional" reserve money in its system, i.e. 25 cents in receipts for every $100 of debt creation. Mogambo Guru calculated that to be .00026% in reserves at the time—just enough, I suppose, for the Fed central bankers to say America is on a fractional-reserve system, albeit .99974% was thin air.
I doubt if the TBTFs even keep 25 cents of every $100 now. After all, “saving” has officially been declared hoarding now, hasn’t it?
And, as this fraction, watered down by the Fed’s machinations since October 2008, becomes even more infinitesimal, the dollar will continue to resemble less and less receipt money and more and more fiat money created out of nothing. At .00026%, I suggest we quit nitpicking now, and just call it pure fiat.
*The Story of Inflation by the Federal Reserve—“Reserve requirements are the proportions of deposits that banks must keep either in their own vault or on deposit with the Fed. …
“For example, if the reserve requirement is 10%, a bank that receives a $100 checking account deposit must keep $10, either in its own vault or on deposit at the Federal Reserve.
“In practice, the Fed does not change reserve requirements very often. In 2008, for example, the reserve requirement on checking accounts had been unchanged at 16% for 14 years.”
Everyone just got poorer slower. The argument is moot anyway; In the end constant percentage changes (and that's what the relevant reserve ratio of 10:1 implies) always result in accelerating nominal increases. Inflation innevitably outruns growth, the fact that it's actually debt just makes things worse when the credit-driven business cycle materializes.
'Double dip recession'?
We never got out of the first dip. Pumped it hard with imagination, but its clearly plunging into depression, which is what is required.
'Double dip'
You mean there are 2 Obummers, 2 Fat Larry Summers, 2 Timmay G's...
Double-dip? The NBER still hasn't said the recession that started in Dec. 2007 is over. Maybe dip further, but you gotta get out before you can "double-dip."
Can't afford a double? We couldn't even really afford the first!
But the double is all our budget will allow as we've spent shatloads for decades to arrive at this moment. This is our "piece d'resistace" of greed and ignorance.
Alex Daley of Casey Research. LoL.
The problem isn't that we can't afford a double dip - the problem was we couldn't afford the last 15 super hot years with everyone spending much more than they earned. . We're going to have to readjust to the days when a house was worth 3-times earnings. We entered a fantasy filled fun-house and the next ride in the amusement park is always the House of Horrors - it will either be filled with reality or Dr. Krugman will take you on the default gravy train. It will be an interesting ride either way.
The 60-year experiment with Keynesianism has ended.
Will economists ever get it right?
There is always a plan B, and plan B may even be planning a plan C and so on. It will not end here.
Keynesianism ends when you lead a horse to water but can't make him drink anymore. After successive leads over the past 60 years, the horse won't drink no more.
grrrrrrr..there is no use talking about double dip, recessions, austerity measures. these are words like using "conservatorship" instead of default or "rehypothecation" instead of leverage.
if something looks like a pile of shit, smells like a pile of shit and has the texture of shit, then it is more than likely shit and needs cleaning up.
here i go again :) skip if you recognise it!
There is no shame in admitting that the reason we are in this mess is because we spend what we don't have. This is a political mess not a personal one. Spending needs to be cut so that not only is the current 10% of GDP fiscal deficit returned to balance, but that we go further and produce surpluses of 5% of GDP until debt is eradicated.
Taxes take 30% of GDP, spending is 40% of GDP. Debt is (say) 100% of GDP. If we reduce spending by one third, the budget will be in balance but the impact on the economy will mean we have to do spending cuts of around 40% to catch up with the decline in government sponsored economic activity.
Then we can leave spending at only 24% of GDP with a surplus of 6% of GDP per annum for say sixteen years and repay the national debt. Debt/GDP of zero.
We can then leave this in place for another 16 years and build up capital stock that would pay for our health and retirement spending.
Do it again for another 16 years and we will be a wealthy nation.
OK OK OK i know we are screwed. We are broke, all of us and we just have to admit that we need to lie, cheat and steal our way out of this and stop paying the favored sectors of lawyers, lobbyists and bankers who are the current best liars cheaters and stealers of our futures.
There is another way. Hit the RESET button, like this.
Set the proper amount of prudent debt and equity ratios per company, state and individual. we can then take the EBITDA or free cash flow divided by a notional "fair" risk adjusted reasonable rate of return for each of debt and equity (i am thinking 5% for debt and 10% for equity).
We can then create a new GDP based on the weighted average sum of these parts. New Government debt can be set at a level that we can afford to pay out of taxes, again probably 10% of taxes.
A new currency can then be introduced at a conversion rate that is consistent with our comfortable ability to service a level of debt we can afford.
We know the old currency is worthless and only has value because the other global currencies are just as fucked or more fucked than we are. SO let's not pretend that fiat currency has any future or that someone else won't come out with an equivalent before we do.
So there you have it. The honest way which we, as liars cheaters and stealers wont adopt because it means we own up, or the RESET way.
It will be just like starting over...wop wop wop wop!
It's the third dip that's fatal.
Keynesianism is fine. The problem is in implementation, when you ramp up government spending to smooth and help stabalize, you are supposed to ramp it back down when private spending increases. Notice that never happens - government has continued to get bigger, fatter, and more involved creating a monster that is at capacity and clearly out of line with reality. The bottom line is that responsible people were not in office, we have career politicians writing slush fund checks to special interests for continued voter support. No thought that someone actually has to pay this stuff. Personally, I'd vote for a pension and asset grab on elected officials in proportion to their in-office earnings. Make them pay for their poor performance in office.
Er, you just proved why Keysianism has no chance.
Slim,
Nice thought, but these same scumballs, are about to get the surprise of their lives.
They have been in power for ever.
But, there's a NEW Sheriff in town,and he is end running them, and doing almost anything he damn well pleases.
The Legislative Branch has all but been made moot, and the Judiciary, is just being tolerated until full control of it is in place........
Remember, "Never Fail To Take Advantage of a Crisis".
All this Stimulus shit has done, is Nationalize the free mkt economy, and seize control. Basically these Stim Pkgs, have been mfg'd CRISES.................
Had 50% of these funds been dispersed to the people directly to be spent(which 95% would have done).............remember 70% of our GDP was always due to consumer spending,debt,or otherwise.
AFTER #1 saving Wall St, then I am sure this wagon would/could have continued on for another 10yrs.
Whether we can afford it or not, it is here. The problem is made worst by the fact people ignore the economic mess our country is in. When our leaders accept reality, we can then split up TBTF and let the markets correct themselves. If not, the Japanese stimulus cancer will eat us inside out.
We will have much worse than a double dip recession. The world is headed into a real scary depression. The stock market will be hammered over the next several months as the economic reality becomes obvious even to idiots!
The government still has one tool in its arsenal. It could decriminalize productivity. You know, let us log our forests again without worrying about some damned owl. Let us build factories, which would be orders of magnitude cleaner than the shit-spewing smokestacks of Beijing. Let us invest without being raped by the IRS. Let us fire incompetent employees, and tell the unions to go to hell. Let us irrigate our fields without being hauled into court over a three-inch minnow. Let us write software without the fear of being sued into bankruptcy for finding an obvious solution to an obvious problem that some company of lawyers owns the intellectual rights for.
Oh wait, each one of those would make a different interest group have fits. So we'll just keep pretending that you can create prosperity by fiddling with interest rates, all the while real productivity has been turned into a federal crime.
Excellent restatement of most of what's wrong with America - producers are discouraged and sitting on your lazy ass is encouraged. My God I hate these socialist SOB's!
Not just discouraged--actively punished. Read how any major bank or corporation was founded, like how the Bank of San Francisco was founded by a guy with a shingle taking advantage of an earthquake. Do the same thing today, and you'd go to prison for breaking rules issued by a whole alphabet soup of bureaucracies.
For anyone who missed the Steve Wynn interview on CNBS regarding the US Government, healthcare and the nervous business climate in America here it is, worth the 4 minutes of your life:
http://www.rumormillnews.com/cgi-bin/forum.cgi?read=174362
okay that was 4 minutes and 45 seconds, but it was worth it. still solutions are what's needed, not just problem recognition.
hooligan,
fearsome had the answer, we had the system, but it was destroyed.
Why, for Globalization, and ultimate power, and control of the worlds economies, and populace............
A Depression, is going to be the LEAST of our problems.........
We will be led, where we do not want to go............and it won't be a request.
Crap or get off the planet is our next and only choice I fear.
Nothing pisses off a casino boss more than the fact that some other big casino isn't playing a straight game. It's bad for everybody's business.
Thanx for the link, Gimp.
Rain,
Easy to see why he's uber rich, he has common sense............as far as Macau?...........Heheheheheh...............he will stay where he is most protected, along with his stash.
I guarantee you this.
If Obama's team of EPIC FAIL were to resign this weekend, the markets would jolt up.
Give me any guy or girl, including Sarah Palin who will declare the days of big government spending are over, anyone truly committed to reduce government and I promise you it will be "Morning again in America".
The business elite knows that Obama is useless.
Oh you'll certainly get your promise
Obama's presidency exposes the flaw in the logic train used to elect him:
1. The boat is sinking; it's never been worse.
2. We need to do something.
3. Shooting a hole in the bottom of the boat is doing something.
4. Therefore, shooting a hole in the bottom of the boat will make things better.
WTF? The "business elite"? who the fuck is that?!? The ones you choose to ally yourself with? Epic fail is systemic - and who gives a fuck about Obama or if the "markets jolt up"? If you think for one second the computers give a flying fuck about politics or about your petty 'investment' ideas, then you are smart enough to get yourself in real trouble. I can't believe anyone would even drop the 'P' bomb on here - that stupid fucking cunt is SO stupid she might as well talk outta her fucking snatch. Any real tea-party speak would be anti-incumbent Dem or Rep and SHOULD vote Indy, Lib, or Green for that matter. I've been drinking a little cuz shit is so fucked up - but please don't spout stupid ass political drivel when the whole system should be fucking burned to the ground. ALL the people that have any chance of doing anything in this system are asshole flapping turkeynecks. Carly can suck my phat tool and Meg can suck my mother's. They are about as 'outside' the system as Schroedinger's cat. Fortune 100 CEO's used to platinum parachutes will save us, yeah.
YOU want to burn a building down but save certain cubicles.... Washington loves a stalemate and I have a pretty good idea that after this election we're gonna be pretty fucking hosed and it's going to be on both sides of "THE PARTY"'s hands. Fuck this shit, buy silver and gold - P/E's can go to 3 - and Ponzi Street straight to the shitter and I won't bat an eye.
Did I mention I've been drinking? Piss off!!
Isn't that what the casino business is based on?
What we can't afford is a stimulus recovery...
The phone call I made to my US House Representative, just before they voted for the original TARP, resulted in a belated letter to me that apologized for his vote by saying, in effect, "But we HAD to do SOMETHING!"
Well, they did something. Borrowing money to fix a debt crisis makes about as much sense as shooting a hole in a leaky boat, yet that's exactly what they did.
I hesitate to even ask what the governmental response to the second dip is going to be. I don't think I want to know the answer.
Afford it or not, the next leg down (no, I don't buy the "double dip" horses*it either) is upon us.
The Great Reflation Experiment is an Epic Fail! in every way but one - it's made the coming Depression rather worse than it would have been otherwise. So take a bow Bennie, Timmy, Hammerin Hank - oh, of course Barry and Georgie, too. You've taken a raging inferno and, rather than containing it to an isolated forrest have all but assured through your actions that the entire freaking globe is going to burn to the roots.
That's right, bastards - take a bow.
I only hope your boss' houses (that would be the global Bankster Cabal) burn hot enough so that some of us might be able to be at least moderately warm when we starve to death.
Freaky times. Seems we are on the verge of a Greek default or enacting, if possible, the Euro TARP. Either way, the implications will be felt far and wide both financially and as an early test case for all those to follow.
We will see what it looks like to bail a "little guy" to the tune of $270B or let him go bust. French and German banks gonna take a $120B haircut? Not likely...but austerity won't allow them to add the losses to the national debts.
Rock, hard place...enjoy one another.
This could be the spark that lights so much dry, interconnected tinder. If not Greece, there's so many more all with same capability to knock down our oh so fragile system.
Double dip? I don't think we'll get there in any sort of organic process through the US economy but instead I'm guessing it'll come as an external Lehman like event(s) cascading together and accelerating all the shit we all know lies in the weeds (RE, CRE, National debt, unemployment, LEI's, deflation, insolvent banks, blah fucking blah).
Any of you get an Option on this?.
"including letting them try to “save” us the last time around."
Not me, nor any of the 60-75%+ of Americans that have done nothing but scream........NO!!!!!!!!!!!!!!!!!!...........STOP!!!!!!!!!
A double dip is a lock or as they say, the fix is in. I'm afraid there is simply no solution out there. QE (n+1) won't help a darn thing. Think about this for a minute.
If the smart money were able to scratch up $1 quadrillion worth of CDS and other debt derivative instruments preceding the crisis, don't you think they'll also have methods and means to extract any excess liquidity out of the public if any QE programs were to perpetuate?
"Letting" them? There was no consent given. IIRC constituent calls to "our" elected representatives ran four to one AGAINST the bailouts. Lot of good that did . . .
"The government is all tapped out."
There's no limit to debt monetization.
How many times does it need to be repeated that declining asset values have nothing to do with money supply? Borrowed money is a liability, it does not cover losses. This is ACCOUNTING FOR DUMMIES.
The whole purpose of lending at zero rate is to help the financial industry generate "easy" returns to cover their losses.
Instead, however, what happens is that financial institutions do not want to work hard just to to get out of the hole they dug themselves into. The big guys use the subsidized profits to pay bonuses, not realize and then cover their losses. Thus, instead of the system being sanitized, things are getting only worse by the day.
To subsidize banks in hope that they will do the right thing was a bad idea from the start.
Do not expect a double dip. Expect an inflationary depression.