With economic pain lingering and our leaders flailing about looking for solutions, two stalwarts from the financial and political worlds have chimed in. Bill Gross, founder of PIMCO, one of the premier bond mangers-- and notably stationed in California well away from Wall Street-- has called for Congress to increase direct federal spending to stimulate employment by investing in our ailing and archaic infrastructure.
Likewise, former President Bill Clinton has laid out a 14-point plan to bring smart jobs and increase energy efficiency with direct federal spending. The only question I have is why so little of this has been done to date. A crushing deflationary recession and increasing needs for fuel, food and functional jobs... this is a screaming call for stimulative Keynesian spending.
Clearly the increase in Federal Reserve liquidity alone has not increased jobs and we need direct federal spending on a massive scale. We learned this lesson in the 1930's and 40's, the last deflationary cycle that didn't end until Europe, Japan and the US put everyone back to work killing each other. It would be nice if we had learned that lesson well enough to obviate another world war. If Obama doesn't do something very soon to get unemployment below 8.5% his legacy will be of a one-term president who was elected with a mandate for change from a devoted and vibrant base, and instead he squandered his presidency on the status quo appealing to the tired tropes of endless war and wall street fat cats.
Obama could have been Marcus Aurelius and instead he chose to be Vitellius; could have been FDR, but opted alternatively to serve GWB's third term. It's really unbelieveable to me.
[One note: Bill Gross at PIMCO has been short Treasuries, so he's talking his book in wanting more deficit spending... but that doesn't make him wrong.]