On Permanent Recession
Indeed, style triumphs substance and words are spun to obscure evidence in mass media democracies, and so far, baby-faced politicians have managed to ascribe all the blames to their less attractive-looking predecessors; they have also managed to sell their own agenda on the hope for recovery into a distant future, and opted, instead of dealing with hard issues, to pussy-foot around with monetary manipulations. However, all the talk has hardly encouraged business creation, demand for investment goods or created social mobility that underpins the creation of a meritocratic economy.
The only way to get out - and everyone seems to know this already - is to allow a financial equivalent of a bloodbath, a period of massive adjustments where asset values are allowed to fall back at real levels. There are a number of problems with this, indeed: If they do, a number of banks will go bankrupt, because they have so many mortgages on their books: However, there is no real choice to get out of this mess without allowing asset prices to adjust to real levels. It will mean misery for everyone, in the short run and this is why no democratically elected leader is willing to do this. But, slowly, we are coming to a point where such a wind-down will be unleashed upon us, and it is somewhat better that it is managed through a policy initiative than a massive, unintended contraction.