by John Bougearel
Oh, the double speak is thick today at the Obama administration. Just another day of spin-meistering I suppose.
“The government is going to have to get serious about reducing our debt levels” Obama told Paul Volcker. Obama also recognized that recovery from this Great Recession or Depression will have to be led by the private sector. Acknowledging this is one thing, making it happen is quite another. You can’t force the private sector to expand, ad you can’t force private banks to lend. Bank lending is contracting at 15% annualized rate, while they hoard more than $1.2 trillion treasuries. Why would private banks take on the risk of lending when they can enjoy risk free rates of return north of 3% on treasuries with Fed funds rates at zero and the yield curve steep as it is? Even a flattening of the yield curve won’t help banks lend because too many other shoes have yet to drop, too many bouncing betty’s with their delayed fuses have yet to blow up on. So, this is mere posturing and rhetoric from our commander-in-chief today.
While that meeting with Volcker was taking place Obama’s Commerce Sec’y Gary Locke told Bloomberg
“If there is to be another stimulus — and that’s being hotly discussed and very seriously considered within the administration as well as members of Congress — it needs to be very targeted, very specific and we need to be very mindful of the deficit as well.”
Well, that statement by Gary Locke detonated in the Oval office. Damage control was necessary and the Commerce Dept spokesman Keven Griffis stepped up to intervene and save the day claiming Locke was being “imprecise.” What Locke was referring to, said Griffis, was
“all the different job-creating measures being considered” in Washington rather than a single stimulus measure.
Now, riddle me this, who is going to buy Griffis claim that Locke was being imprecise. If you buy that I have a bridge I’d like to sell ya.
