Stuck In Keynesian Prison

Alan Blinder displays the Keynesian reductio ad absurdum that is plunging our world into financial chaos. Check out this lovely tidbit: "Unfortunately, the basic economic message about deficit spending today requires some subtlety: Most countries need fiscal stimulus today but a large dose of deficit reduction in the long run." OK, Alan, give us a date when we should start spending only what we can afford and assure us that there won't be other unforeseen circumstances that would make it hard to start being fiscally sound on said date. And convince the Greek people of that. Only an academic could say things like this. Somehow Blinder equates 20% of the Greek population getting paid for 14 months a year as fiscal stimulus. This isn't stimulus, it's welfare; and it's been going on for years, not just in the last few in response to crisis. There is no leeway to "stimulate" just a tad longer and then shift gears to a prudent stance. The Greek welfare state has reached the end of the line. The gig is up and the bond vigilantes are not bungling the subtle economic reality of a fragile situation. The carrion is festering in the Mediterrean sun and the stench is attracting the vultures, the vultures didn't cause the stench. Blinder has a small point in that the bond market vigilantes are now looking for anything in the "near dead" category and are showing no mercy. However, all of the contagion could be stopped dead in its tracks if problem countries cut their fiscal deficits to zero. The run on the Euro and sovereign debt would be over because investors are inherently betting on human nature, on the inability of politicians to act, act prudently, and act prudently in a big damn hurry. If they saw politicians acting prudently in big way, they'd unwind their bearish bets. But politicians, especially European ones, are shackled to a Keynesian Frankenstein of an idealogy that conflates welfare with stimulus - abetted by people like Alan Blinder - that is prolonging the current crisis.