Holdovers from 2008 that spell economic disaster still rock the headlines, but the New Year seemed to have pumped fresh hope into everyone’s hearts.
Despite claims that this spell of optimism is just a short holiday boost, some believe that 2009 presents a good chance to fight off the recession and rise from the ashes. A new era is about to begin: a new president, new economic policy, and new banks—well, more like a new transition until we figure out a new way to carry out business as usual.
So far we have more than full faith in our incoming president (he is our Luke Skywalker), yet his capability to rescue a country from recession need sold evidence to support. So far a rescue plan using taxpayer money and a war shifting to Afghanistan doesn't seem to differ much from our current economic policy.
The incoming administration has a lot on their hands. Alan Greenspan's era of errors on economic policy flooded the country with cheap credit that led people to take an ill-advised jump toward their American dream. After that bubble burst, we now have a zero interest rate and a paper printing machine that can't stop. So-called “quantitative easing” is now the buzzword. We have newfound hopes for our financial institutions to take money out of their mattress and invest again.
History is the greatest teacher in the world of finance. What our Fed doesn't realize is that we are stepping onto a path of no return. The exact has been done in Japan, and what followed was a decade of deadbeat economic environment that persists to this day. Such policy is the womb of speculating activities such as carry trade.
Now the Keynesians shout once more, “I told you all to leave the market alone and let nature take its course.” These words of great wisdom, of course, lose meaning if you happen to work at a failing auto plant, are missing your payment on your mortgage, and face the prospect of losing your job.
The people demand interference with nature. Greenspan wrote in his autobiography that despite his belief in the “free market” he realized he had to interfere once he was sitting at the wheel.
How the incoming administration will handle the situation will soon to be seen.
Michael E. Lucid is a columnist for The Epoch Times.