Bazookanomics : central-bank money printing

Extrait de: Bazookanomics, Terence Corcoran, FP, Nov 30, 2011

Search for the ‘big bazooka’ of ­economic policy misses the target

For months now Europe has been searching for the big bazooka of economic policy to get it out of its fiscal mess. Exactly when bazookas became a core principle of economic policy isn’t clear, but it is today everywhere in use. Google “euro and bazooka” and you’ll see what I mean.

In the high precincts of economic analysis, there is general agreement that Wednesday’s move by central banks, including the Bank of Canada, the Federal Reserve and the Bank of England, to make cheap dollar loans available to European banks, while a major bailout event, falls short of reaching the level of intervention required by the high priests of bazookanomics. “It’s not the bazooka the market was seeking,” said a Wall Street Journal report.

One of the early users of the word was Hank Paulson.

As U.S. treasury secretary in 2008, he famously said,

“If you have a bazooka in your pocket and people know it,
you probably won’t have to use it.”

At the time, his theory was that the U.S. government would not have to take over control of Fannie Mae and Freddie Mac because just having the power to take them over was good enough stop a bond market run on the two bankrupt mortgage backers at the heart of the U.S. housing crash.

As with much of economics these days, Paulson’s theory proved wrong. The markets were killing Fannie Mae and her brother, and the government had to take out the bazooka and nationalize the companies.

They’re still broke.

Imaginez, si nous avons une bulle immobilière qui éclate, on n'a même pas besoin de bazooka, on n’est dans un tas de MERDE, car nous sommes propriétaires de la SCHL.

More recently, British Prime Minister David ­Cameron has been ­calling for the European Central Bank to bring in a “big bazooka” to save Europe.

In this case, it turns out that bazookanomics is just another bit of economic jargon for central-bank money printing.

George Soros, the international currency speculator and insider trader, last month called on European leaders to deploy a bazooka aimed right at the euro crisis. At the time, Mr. Soros thought the $610-billion European Financial Stability Facility set up by euro nations needed a bigger store of economic ammunition. Europe, Mr. Soros told writer Chrystia Freeland, “actually has the bazooka in its hand, provided it uses it in the right way.” The fund could be used, he said, to bail out Europe’s banks.

As the world is coming to understand in this new era of bazookanomics, no one theory seems to contain enough explosive economic matter to blow away decades of euro welfare statism and chronic overspending.

Plans to load up new bazookas to force European nations into a mandatory fiscal union, with each country subject to some central authority on debts, spending and deficits, appear to be unworkable.

As Edward Neufeld observes in an accompanying commentary, even the federal government in Ottawa has no such power over Canada’s provinces.

Exacte, le Canada et l’Espagne, nous n’avons aucune loi constitutionnelle qui empêche les provinces ou régions à
faire des déficits.

If there’s a unifying core to bazookanomics, it appears to be an attempt to use massive economic manipulation:

·         Central bank printing presses, taxation of solvent countries to cover the debts of the bankrupt, International Monetary Fund loans

·         To somehow vaporize trillions of dollars in bad debts.

In the end, however, no amount of violent economic jargon will propel

Europe out of its central problem:

Too much spending by countries with bad economic policies.