Tuesday, June 5, 2012

Steve Liesman Calls for More Intervention!

Steve Liesman from CNBC has written a commentary suggesting that it is time for the United States to lead from the front regarding Europe.  Given the nature of the author, you can guess his proposal includes generous helpings of government intervention using other people’s money.

It’s time for the US to express its dismay at the lack of progress and to begin corralling world resources to incentivize Europe to solve its problems.

So here’s a plan:

The US should lead the world in creating a large pot of money available to the Europeans to recapitalize their banks. A $2 or $3 trillion fund should get the market’s attention. Whatever the number, about one-third of this should come from the IMF.

Two-thirds should come from Europe. European money should be in the first loss position, that is, the IMF, as is always the case, should not suffer a dime of losses until all the European money is wiped out.

The only place the U.S. has “funds” to provide to the IMF is through further money printing by the Fed.  For Europe, the main source would be money printing by the ECB, although the Fed has also in the past been a back-door source.

As for the domestic politics and a certain isolationist outcry, at this point, what’s the difference for President Obama? Europe, together with the anemic US recovery, already seems to be guaranteeing a one-term presidency.

In terms of “isolationist outcry,” does Liesman find it inappropriate if I am isolationist toward a thief taking my property?  If so, I guess call me an isolationist.

Collective action in times of panic is what governments are supposed to do. Be it response to a natural disaster like an earthquake or a financial crisis, governments should step up when the market or the individual can’t act.

Steve Liesman is the collectivists dream.  “Collective action in times of panic” is most certainly NOT what governments are supposed to do.  To the extent one believes government (in the form of something like what we know these today) is “supposed to do” anything, it is to protect the individual’s property rights.  Government is supposed to act in a manner only available to an individual – self-defense.  Government cannot have any more right to take any action than an individual has because an individual cannot give license to that which he has no right.

I know Liesman is a shill for the establishment.  I debated even commenting on this post.  However, I think it points in the general direction of the likely path.  Central banks will inflate.  Inflate or talk is all they can do.  They will inflate as long as the manipulated CPI numbers allow them to do so.  As the partner in crime calculates those CPI numbers, rest assured there is plenty of room left to maneuver. 

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