I'll Stop Calling This Crew "Orwellian" When They Stop Using 1984 as an Operations Manual
Disparate Impact...

Stick a Fork in: They're Done!

Steve Pearlstein, who is *not* the author of the excellent Goldwater book Before the Storm, roasts the Bush Council of Economic Advisers:

Did You Hear the One About the Trade Deficit? : The White House Council of Economic Advisers is not generally known for its playful sense of humor. But in the annual Economic Report of the President, released this week, the CEA decided to have a bit of fun with the record $726 billion trade deficit.... [T]hose wry PhDs framed their analysis not as consumption exceeding production (the so-called current account deficit), but as a consequence of cheap foreign capital financing our profligacy (the capital account surplus, which by definition is its mirror image). It's a bit like General Motors, ending a disastrous sales month, declaring what a good period it had been for inventory replenishment....

A somewhat different view has recently been offered by Mervyn King, head of the Bank of England, and economist John Makin of the American Enterprise Institute. Their warning is that the "savings glut" is, to a large extent, really a "liquidity glut" caused by central banks, primarily those of China and Japan. For reasons that made sense in the context of sustaining growth and stabilizing prices at home, these central banks wound up printing too much money -- money that is now sloshing around the globe looking for some place to be invested.... [A] big portion of that money has gone into government bonds everywhere, creating a bond market bubble, which has the effect of lowering inflation-adjusted interest rates to ridiculously low levels.

That was evident last month when the interest rate on inflation-adjusted, 50-year British bonds fell to 0.38 percent, well below its historic norm of 2.5 percent. And we saw it last week when the U.S. Treasury, issuing its first 30-year bonds in four years, got $28 billion in bids for $14 billion of bonds being offered, making it cheaper for the Treasury to borrow for 30 years than six months.

The problem, as King and New York Fed President Timothy Geithner laid out in separate speeches last month, is that these asset-market "bubbles" now have the potential to spill over into the real economy.... [W]ith labor markets relatively tight, and health, energy and commodity costs putting upward pressure on prices, and a falling dollar likely to raise the price of all those imports, it's likely that the Fed will soon have to break the news that it won't be able to stop raising rates after its next meeting on March 28, as financial markets now expect.

It's at that point that a sense of humor will come in handy.