Interesting view of the current crisis from John Batchelor, a very informed and able man with whom I sometimes disagree:
Usually, a Keynesian approach might work. Unfortunately, that has not worked over the last year. Everyone is too leveraged: the Federal Government; the States; Municipalities; Businesses; and Consumers. We are more like Attlee’s 1940s England than FDR’s 1930s America. We need to get the savings rate up to get banks to lend. We need to pay down government debt before it crowds out what little private borrowing that is happening. We need to avoid an oil and gas price spike that will accompany (and probably strangle) any recovery.
Here is my modest proposal:
—Cut taxes, especially on 1099 interest income to encourage deposits;
—Stop trying to “bailout” failing businesses, Fiat’s recent interest in Chrysler demonstrates that markets can potentially solve business problems governments can’t;
—Sell off public lands to pay down debt and privatize all functions like running museums and the like, putting all the revenue towards paying down debt;
—Slash all Federal legal and regulatory bars to oil and gas exploration and development and those on nuclear power, encourage states to do likewise;
—Vastly reduce the size and scope of the Federal Government, (Why is there a Department of Education?);
—Consider allowing Federal territories, like Guam and Puerto Rico, to purchase their independence if they so desire, allocating revenues towards debt reduction;
—Bailout states only if they agree to a “Washington Consensus” series of economic reforms;
—Repeal all Federal wage and hour laws and regulations and encourage states to do likewise;
—Encourage all states to become “Right to Work” states; and
—Consider adopting George W. Bush’s original September 2001 concept of how to fight AQ: not a war but a balanced spectrum of law enforcement, diplomacy, intelligence gathering and covert actions, likely to be more effective and cheaper than what we have been doing.
Will this work? I don’t know. However, what we have been doing isn’t working.