Must-Read: Very nice to see. Very good. But four brief whimpers:

  1. "Structural reform" is a very dangerous thing to do in a low pressure economy. Moving people from loss-making improperly-subsidized industries into unemployment is, in fact, the very opposite of useful "structural reform". But that is what "structural reform" is--unless we also have a high pressure economy.

  2. Even at its best, "structural reform" is not a substitute for proper monetary, fiscal, and financial regulatory demand management and stabilization policies. It is at most independent of them, and more likely something that requires that they already be in place.

  3. We do not know whether we need large policy bangs, or whether a small policy bang will set in motion a powerful virtuous circle. We should not overpraise here.

  4. The root political problems are that depression elsewhere in Europe is not a minus from the perspective of the political masters of a prosperous export powerhouse Germany, and that an inadequate economy in the United States is not a problem but an opportunity for Republicans in Congress as long as there is a Democratic president. Hence either those who vote for austerians the Bundestag and the U.S. Congress need to be convinced to take a more cosmopolitan view (hah!), or extra-electoral pressures need to be brought against austerian politicians. I have no idea how to do this, and no levers. But perhaps the international financial cosmopolitan clerisy of which Muhamed is a leading light could put forward some ideas, and build some levers?

Mohamed El-Erian: Jackson Hole Was a Missed Opportunity for a Policy Pivot:

Central banks policy tools alone are ill-suited to overcoming the challenges....

If the excessive reliance on central banks continues, there is a risk that the (Bernanke-specified) “benefits, costs and risks” equation will develop in a manner that involves consequential collateral damage and a broader range of unintended consequences... for the global economy... [and] central banks’ political autonomy.... What is urgently needed is a policy pivot: away from excessive dependence on central banks to a more holistic policy response that involves broader pro-growth structural reforms, more balanced demand management (including higher infrastructure spending), lifting pockets of crushing excessive indebtedness (such as debt relief for Greece and pre-emptive action on some US student debt) and improving cross-border policy co-ordination (regional and global).... It is dangerous to continue to focus the debate, be it in the media or among professionals, primarily on what central banks can do. It would be much more productive to energise a campaign that increases awareness of why the advanced economies are yet to unleash fully their considerable economic potential, what needs to be done and who needs to act....

We don’t necessarily need a big policy bang.... A small one... would act as a catalyst to release into productive uses the considerable corporate cash that is currently on the sidelines.... But time is not in our favour.... The world economy is heading to a “T junction”.... One road out... involves higher and more inclusive growth and genuine financial stability.... [The other:] low growth... periodic recessions, inequality will increase... unsettling financial disorder.