What do you get when you combine a confederacy of dunces with a union of demagogues? Why, this global economy, of course, or at least its sclerotic transatlantic variety (Communist China is, capitalistically, doing just fine, thank you very much).
Paul Krugman, on the dunces:
[L]ast week the European Central Bank declined to cut interest rates. This decision was widely expected, but that shouldn’t blind us to the fact that it was deeply bizarre.... By any of the usual rules of monetary policy, the situation calls for aggressive rate cuts. But the central bank won’t move.
[I]t’s becoming increasingly clear that it will take utter catastrophe to get any real policy action that goes beyond bank bailouts. But don’t despair: at the rate things are going, especially in Europe, utter catastrophe may be just around the corner.
Ezra Klein, on the demagogues:
[P]olicymakers have a range of shock absorbers meant to help the United States ride out bumps in the global economy. Congress can cut taxes, put people to work building roads and bridges, and provide money to state and local governments who might otherwise have to make layoffs, to name just a few options. The Federal Reserve can cut rates, tell the market to expect an extended period of easy money, or buy assets....
[Yet] America's economic policymakers are likely to do nothing, or close to it. That means the future of our economy -- and arguably the outcome of our election -- is in the hands of others. It doesn't have to be that way. But, for now at least, it is.
I remember that as a wee undergraduate, studying the "science" of politics and political history, I would have combustible arguments with my brother about the relative importance of my majors to the study of economics. My brother maintained that economics drove politics; I, the reverse. National politicians come and go at the mercy of independent market forces, argued my sibling, who was born with a nasty capitalistic streak. But it's the pols, I would counter, who manipulate the conditions in which your precious markets operate, hence though rising or declining markets may determine the next batch of pols, it is politics as the First Mover.
Now, merely from reading the Krugman and Klein segments above, one might think that I have finally proved my case for the supremacy of political studies over dark economics, and that I should move for a summary judgment. But ... I have changed my mind, I'm done with prosecuting my case. Because I now see that to have really understood politics, I should have majored in abnormal psychology.