Central bankers around the world are stuck at zero — plead with politicians to take action


Christopher Sims, Nobel LaureateMercoPress

❝ Central bankers in charge of the vast bulk of the world’s economy delved deep into the weeds of money markets and interest rates over a three-day conference recently, and emerged with a common plea to their colleagues in the rest of government: please help.

❝ Mired in a world of low growth, low inflation and low interest rates, officials from the Federal Reserve, Bank of Japan and the European Central Bank said their efforts to bolster the economy through monetary policy may falter unless elected leaders stepped forward with bold measures. These would range from immigration reform in Japan to structural changes to boost productivity and growth in the U.S. and Europe.

Without that, they said, it would be hard to convince markets and households that things will get better, and encourage the shift in mood many economists feel are needed to improve economic performance worldwide. During a Saturday session at the symposium, such a slump in expectations about inflation and about other aspects of the economy was cited as a central problem complicating central banks’ efforts to reach inflation targets and dimming prospects in Japan and Europe…

❝ In an…address by Princeton University economist Christopher Sims, policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future.

“Fiscal expansion can replace ineffective monetary policy at the zero lower bound,” Sims said. “It requires deficits aimed at, and conditioned on, generating inflation. The deficits must be seen as financed by future inflation, not future taxes or spending cuts.”

The usual Reagan rationales for doing nothing infect what passes for 21st Century conservatism. Absence of backbone and craptastic excuses characterize liberal political parties outside of the milieu of European labor parties. The time for ennui is over. Bernie Sanders’ campaign in the United States proved that.

What can spending on infrastructure do for your state?

❝ Here’s something all of divided America should be able to agree on: Smart infrastructure investment works. For evidence, look at Colorado, where elected officials of both parties trace an economic boom to a decision 27 years ago to spend more than $2 billion on a new Denver airport.

❝ The Denver International Airport was the brainchild of Federico Pena, who was elected mayor in 1983 and who would become the Secretary of the Transportation and Energy departments in the Clinton administration. It was assailed as a boondoggle by some local businessmen in a campaign led by Roger Ailes, then a Republican media consultant and later the impresario of Fox News.

❝ The airport was financed by revenue bonds, which proved to be among the best performers in the market for state and local government debt. Today it is the linchpin of Colorado’s transition to a global 21st-century economy flush with high-paying jobs and enhanced by daily nonstop flights to Asia, Central America and Europe.

Colorado has many economic advantages, from shale to ski resorts and beyond, but state officials say the new airport was the catalyst needed to set off the boom. “It’s foundational,” Governor John W. Hickenlooper said in an interview last month in his statehouse office. “I mean we look at infrastructure” as the central element “to build our new economy around.”

❝ The airport’s…annual economic impact today exceeds $26 billion, more than eight times [the old airport] Stapleton’s in 1984…It has generated more than 270,000 jobs, almost twice the comparable figure for Stapleton 32 years ago, and $295 million in concession gross revenue, compared to $45 million for Stapleton in 1994…Passenger traffic was a record 27.5 million for the six months through June, up 6.8 percent from 2015. Stapleton had 33.1 million passengers in all of 1994…

❝ Colorado’s economy, meanwhile, is leaving behind its reliance on mining and energy. Since 2012, the accommodations and food services industry grew 22.5 percent, faster than in any other state except Texas and California, according to Bloomberg data. Health care and social assistance companies expanded 17.4 percent, the most for any state. Wholesale trade grew 17.7 percent, the fourth best in the U.S. since 2014, and finance and insurance grew 7.4 percent, bettered only by Utah and Nevada. Today, material and energy make up less than 30 percent of the total market capitalization of Colorado’s publicly traded companies, down from 53 percent in 2010.

And that’s the killer for me. Living in New Mexico, everything that was backwards about Colorado in the 1980’s is still alive and well in New Mexico. Our Republican governor has only one response to a budget defined by oil and gas production in a downturn. Austerity, cut the budget for everything from education to social welfare. Infrastructure upgrades started by the previous Democrat governor are still incomplete – mostly because she hates to admit a Democrat did something useful.

And I’m not confident the likely return to a majority Democrat state legislature is going to change our reliance on extractive industries and military subsidies.

Nutball Bundys go on trial

❝ This Wednesday, September 7, marks the start of the trial of brothers Ammon and Ryan Bundy and six other defendants charged for their actions during the 41-day occupation of the Malheur National Wildlife Refuge in Harney County, Oregon, earlier this year. The case is the first to bring the Bundy family and their supporters before a courtroom and jury after they were at the center of two volatile standoffs with the federal government.

❝ The Bundy family first gained attention in April 2014 when Cliven Bundy, Ryan and Ammon’s father, forced a showdown with federal officials at his Nevada ranch after the government announced it would seize his cattle for his decades-long refusal to pay public-land grazing fees. The Bundys called on militia members and anti-government extremists to support their crusade, leading to an episode where 400 armed supporters intimidated federal agents tasked with confiscating Cliven’s livestock into abandoning the job and leaving.

❝ His sons renewed their defiance at the start of 2016, occupying the Malheur refuge. The takeover began as a protest of two local ranchers’ prison sentences for arson on Bureau of Land Management land but developed into a weeks-long rally of roughly 25 to 40 people calling for the seizure of federally managed lands across the West to be given to states, counties or private landowners. Even without support from the jailed ranchers and many locals in Harney County, the armed occupiers lingered, controlled access to the refuge, and made use of government offices, computers and vehicles. The occupation wound down only after state police shot and killed one of the leaders, Robert “LaVoy” Finicum, while apprehending the Bundy brothers and others during a January 26 highway blockade.

❝ Cliven Bundy was then arrested in early February at the Portland airport while traveling to support the last of the Malheur occupiers.

❝ “The case against the Bundys is pretty substantial,” says Ryan Lenz, writer for the Southern Poverty Law Center and its Hatewatch blog, which monitors hate groups, militias and anti-government activities. “The real questions at the heart of this trial is what kind of antics will happen and what respect and deference will they give to the court.”

Watch this space. Our uptight media will make scant mention of the trial. No doubt. For-real journalists, especially those cognizant of American history and nutball outlaws like the Bundys will offer thorough coverage. Which we will point out.