Citigroup chief economist Willem Buiter:
There really is no politically feasible route back to sustained economic growth through monetary and/or demand stimulating policies for the EA, the UK, the US and Japan, for many years to come. As regards demand stimulus, expansionary fiscal policy will not be punished by the markets to the point of being self-defeating for all EA member states except for Germany (which will not do it on any significant scale for domestic political reasons). The US also may be technically able to use fiscal expansion to stimulate demand, but even if markets continue to be tolerant, political gridlock makes it impossible. Expansionary monetary policy is at the end of its rope in the US and Japan. The UK could cut the official policy rate by 50 bps and the ECB by 125 bps, and then they too are restricted to quantitative easing (QE), which I consider to be ineffective.
via Buiter: no politically feasible route to sustained growth for many years to come | Credit Writedowns.
This is nonsense.All squeezed empires transfer the costs to their opponents and enemies.
When Rome was bankrupt it conquered Gaul and became flush.
When England was bankrupt after the Napoleonic wars, it robbed India and became whole.
After the junk bonds fiasco, the US did Gulf War 1 in 1991, and got a 10 year bull market.
After the dot.com disaster, the US did Gulf War 2 in 2003, and got a 5 year bull.
Gulf 3 is a nasty necessity, and will be done.
The US consumes $850 bil worth of oil a year; Europe about the same.
A 50% cut in oil price are $1 trillion a year of savings.
This will make the West blossom. But of course, the East will be another story. But they don’t vote here, do they?…
In sum;
The only way to bring growth back is to take it from our enemies. Under the cover of high-flying words, this shall be done. Indeed, there is no other way.