Austerity Now

Turns out the bond vigilantes and confidence fairies don't want to buy what Congress is selling:

Both parties, in fact, are moving to anti-Keynesian policy orientations, which deny additional stimulus and make rather awkward and unsubstantiated claims that if you balance the budget, "they will come." It is envisioned that corporations or investors will somehow overnight be attracted to the revived competitiveness of the U.S. labor market: Politicians feel that fiscal conservatism equates to job growth. It's difficult to believe, however, that an American-based corporation, with profits as its primary focus, can somehow be wooed back to American soil with a feeble and historically unjustified assurance that Social Security will be now secure or that medical care inflation will disinflate. Admittedly, those are long-term requirements for a stable and healthy economy, but fiscal balance alone will not likely produce 20 million jobs over the next decade. The move towards it, in fact, if implemented too quickly, could stultify economic growth. Fed Chairman Bernanke has said as much, suggesting the urgency of a congressional medium-term plan to reduce the deficit but that immediate cuts are self-defeating if they were to undercut the still-fragile economy.

I really don't know who else we have to come out and say these things before people realize how completely fucked our current "debate" about fiscal policy has become. The constant Beltway/Village obsession with deficit reduction is ill advised, stupid, and contagious. Our stupid country will believe pretty much anything, because the people can't be bothered to, you know, do some basic research and critical thinking to form their own opinion. As Digby notes, there is now a close correlation on belief that the deficit is the reason for the prolonged economic hardship and unemployment. 

Companies are not hiring because there is a lack of aggregate demand, and with the specter of 9% unemployment looming, they can pretty much get their current employees to do anything out of fear that they will end up as part of that statistic. Shrinking the deficit will not create jobs; creating policies that stimulate demand will create jobs.

I don't know why I bother though. If our Congress critters won't listen to Nobel laureates or the Fed chairman or incredibly successful institutional investors like Gross, then I'm not really sure much can be done to change their minds.