King is the Bank of England governor and he has taken the reasonable view
that a nation shouldn’t spend what it can’t afford to spend. On that basis he’s now standing up to Gordon Brown’s government
and saying enough—put a brake on the stimulus.
This isn’t complicated stuff: At some point you spend so much and imperil your economy so clearly that nobody will lend to you, and so your interest rates explode, which vastly compounds your recession.
The counter-argument is as simple: We’ve no alternative but to spend wildly in the deepest hope that we can kick-start the economy before we kill it.
It’s a fine balancing act between those two realities. The art is in the balance.
So why no balance, or much of any discussion, in the US?
The possibility that we will spend ourselves into oblivion before saving ourselves is only slightly less pressing than it is in the UK. But there is no voice in the US, but for the Republicans
who bear so much responsibility for the mess (Karl Rove is blathering on
in the Wall Street Journal
today about the stimulus—which would incline most reasonable people to support it), begging for moderation.
Certainly not the theoretically independent chairman of the Federal Reserve, Ben Bernanke, who has not only expressed solidarity with the White House spending plan, but showed up at congressional hearings on Capitol Hill wearing the same tie as Treasury Secretary Geithner. Everybody is in sync. Nobody’s standing up to anybody anytime soon. (Likewise, nobody’s much objected to Geithner’s bid yesterday
to take control of lesser regulated parts of the financial markets like hedge funds and private equity groups.)
It’s weird, this lack of obvious response. Or not. It just may be that nobody knows what else to do but break the bank, and like Gordon Brown, most everybody in Washington continues to hope that spending crazily, with any luck, will get us out of this mess before the spending itself sinks us.
But what if it doesn’t? What if this calculation, insofar as it is a calculation at all, is faulty?
It’s always good to have someone else check the math.
More of Newser founder Michael Wolff's articles and commentary can be found at VanityFair.com, where he writes a regular column. He can be emailed at email@example.com
Who is going to play Mervyn King in America—who'll play the prudent voice of reason? Not the obstructionist Republicans who long ago got disqualified from reasonableness.