[PharmaDrMan]

The only one to blame this on is the S&P.

[Queueftof]

I'll ask the Moody's.

[HotboTgameR]

I'll ask the Moody's.

They should just combine to be the S&M. Then economics might be a little more fun.

[Feflyinvelf]

... on so many levels.

[DaleJrGirl]

Wouldnt alan greenspan do the same thing?

[Aceroassert]

5 yr nominal yield down to 84bps. 5 yr tips spread down to 1.76%

When will the ben bernank's tight money policy end?

[orbidewa]

won't somebody please think of our too big to fail banks.

Yes, because avoiding an unnecessary recession is pandering to the banks.

5yr tips spreads now at 1.7%

[vSzsgifP]

So, here comes the double-dip, eh?

Lovely.

KH to the Fed. Kuci to the OBM. Tupak as WH press secretary.

Yeah, yeah, I'm tipsy. Sue me.

As for Obama's mistakes: I think the admin was fundamentally correct to view healthcare reform as the big enchilada when it comes to the long-term budget problem. But they chose a reform that strikes me as unlikely to acheive the savings required, and they spent a really long time getting it done, and didn't get much else done during that time.

-Arrian

[gvataler]

http://www.rollingstone.com/politics...rimes-20110817

I know it is rollingstone, but some of the statements seem to suggest severe wrong doing/etc, and provides another part of the reason why this drop has been so bad and so lasting.

JM

[Mereebirl]

Matt Taibbi, along with every other moron who thinks that non-central banks have a magic power to cause enormous multiyear drops in US output is partly to blame for the deafening silence of the left in asking for easier money. Despite their other idiocies, both Rick Perry and Michelle Bachman understand that the Fed's continued tight money policy is what's holding back US output, increasing their own chances of gaining political power. Democrats in the US should be calling for the ben bernank's head (or more rationally, Fisher's, Plosser's and Kocherlotka's).

[ufUUZCnc]

In the medium term (as we're now well into) my suspicion is that continued tight money mostly affects real output through longer term debt contracts. Debtors attemot to repair balance sheets (damaged by a drop of ngdp below trend), drying up demand for credit. Long-term interest rates drop, and monetary velocity is reduced. Remember that liabilities are now worth 10% more as a fraction of gdp than they were predicted to be when entered into...

[karaburatoreror]

It seems clear that the Fed needs to have easier money right now. And we need to consolidate our spending drastically -- get the congress the hell out of the business of stimulating the economy.

Greenspan was the cause of all of this mess, but Bernanke isn't fast enough on the draw right now.

[LarryG1978]

The way to think about how the fiscal and monetary authorities under a fiat money regime work together is that the fiscal authority affects the demand for money (purchasing goods with debt) and the monetary authority affects the supply of money (purchasing assets with money). The monetary authority moves last in this game, and targets the price of money. Therefore, the fiscal authority can only affect the proportion of AD coming from government, not the total amount of it. Private impact on money supply and demand are endogenously determined.

[zatronanec]

The way to think about how the fiscal and monetary authorities under a fiat money regime work together is that the fiscal authority affects the demand for money (purchasing goods with debt) and the monetary authority affects the supply of money (purchasing assets with money). Under normal circumstances, but here's what is happening. There is so much bad debt out there, that the QE is simply getting ate up trying to cover and unwind the bad debts. The only way Bernanke can even move the bad debts is to increase the money supply 10x. Which, isn't going to happen.

The best thing that the Fed can do is nothing. Let the bad debts come through and blow up the institutions that invested in them. Purge the bad debts. Will probably spike things over the next while, but it's the only way things will work.

Had this been done in 08, we'd be in recovery by now. Had QE2 not happened, we'd be in recovery now, had Obamacare not been in, we'd have recovery by now. Instead, the same flawed strategy of spending and spending fends off things for awhile, but eventually the piper comes due.

Iceland refused to bail out the banks that made bad debts, and they are doing well now.

[jobsfancy]

Yeah, fat lotta good the deficits are destroying America. Time to rein in the money, cut back cut spending and go on from there.

This is the worst recession since the Gerat depression, and you have the gall to say that if only we opened up the spigots again, things would be rosey? Bull.

QE1 was a failure. QE2 is a failure, time to change plans!

[TainuibeFaimb]

LACK OF AD (A DROP BELOW TREND) CAUSES REASONABLE DEBTS TO GO BAD. ALL SHORTFALLS IN AD CAUSE BALANCE SHEET RECESSIONS. THE FED OWES US A 10% BOOST IN NGDP. GIVE US OUR AD BACK, BEN (bernank, not kenobi). QE1 was supposed to save us. It didn't. QE2 was supposed to save us, it didn't. QE3 would just do the same thing. A temporary burst and then resuming the fall. The reason that QE keeps failing is because of the bad debts that have to be unwound being several orders of magnitude larger than QE. It's like filling your car with an ice cream cone.

[palantownia]

That's not a good analogy, but I think that KH's whole point is that QE1 and QE2 weren't big enough. We need QE3. Now. And make it big.