As you can see, Bernanke is discssuing the detetriorating financial conditions in Europe and is telling to rest of the FOMC how the EBC is reacting. He then says he "hopes" for austerity measures:
Again, I think the basic proposals will be some kind of guarantee mechanism for euro debt, plus, we hope—although we’re not certain—that there will be new austerity measures from Portugal and Spain, and additional mechanisms or steps may be taken as well. We know that things are being discussed, but nothing concrete has been agreed upon.
So if Bernanke's "warm & fuzzy" personality had anyone confused that he was not pro-austerity, this quote should disabuse them of that notion.
5 comments:
Matt right then this guy simply does not get.
How this morons come to such high positions of authority is beyond me.
gotta get that govt spending down to help guarantee the debt... otherwise they might run "out of money!"....
I, its the OT paradigm... somebody has to be borrowing under terms of default which then creates an opportunity for forgiveness, rinse repeat..
this is probably the operative cognitive bias we are ultimately up against... imo pretty severe dogma.... its basically the basis of their entire thousands of years old religion...
At least that would be a paradigm, a bad one, but one that "kind of works".
Instead what he is suggesting here is basically "debt peonage", everybody has to cut down on spending so somehow, magically, we will be able to sustain the debt. OFC the next question is from where the hell is the money coming from to 'balance the budgets' if everybody is cutting down on spending to reduce their liabilities.
The thing is that even out of paradigm mainstream economists get this is not possible (hence 'austerity' is bonkers and totally discredited economic policy by now), but this idiots in the cenral banks, IMF and other useless institutions won't let it go.
He should talk to his friend Draghi and get a position in the ECB surely he can get one...
Probably next talking point is "increase competitiveness to increase export incomes and balance the budget!", he can choose to between a position in Germany either in the foreign minister, where I heard Germans are trying to contact intelligent life in Mars so we cna export there our real goods while receive the highly valuable Martian Dollars or the finance minister along with Dr Strangelove aka Schauble.
What a sinister bunch...
Or they could just admit default as suggested by Stiglitz/Varoufakis/Galbraith in the Greece situation ... then get forgiveness/absolution via a new deal and start it all over again...
Bernanke is just trying to avoid default via the only way he knows how to ... ignorant of "grace" ... iow to him "just give them the f-ing money!" dont fly....
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