Смерть Кейнс (*)
By Mitch Berg
Russia, the for most of the past century the laboratory for so many bad social ideas, is taking aim at Keynsianism:
Russia signalled a change in its policies to fight the financial crisis on Wednesday, indicating that it would switch from bailing out individual companies to supporting the economy through the banking sector.Moscow also plans huge budget cuts in an attempt to limit its fiscal deficit – rejecting pressure to follow the US and other western countries to try to stimulate the economy with a big boost in public borrowing.
The proposals suggest that Moscow is losing hope it can stave off the crisis with public spending and is instead battening down the hatches for what might be a prolonged recession.
“…battening down the hatches”, or has merely figured out that extended, pronounced Keynsianism doesn’t work.
(*) “Smiert Keynes” – a takeoff of the Stalin era purge “Смерть шпионам”, (Smiert Spionem), or “Death to Spies”.
February 6th, 2009 at 9:46 am
It is simply amazing that even Russians get it, but chattering class in Washington DC does not. Whatever happened to this country?
And if Russians are going to be even half as thorough on administering Смерть to Кейнс as they did to шпионам, watch out for the steamroller.
February 6th, 2009 at 10:06 am
They’re being realistic. If you look at the history of housing busts it takes 3-5 years before recovery begins even with good governmental policies (and it doesn’t look like Obama’s going the good policy route). Housing based recessions take much longer to work out than recessions simply because the stock takes longer to work down in price and the slowness of foreclosure to work things out.
If Russia takes the historical view of a 3-5 year downturn, then they’re in it for even longer. As a commodities based economy they’re very dependent on commodities prices recovering and that won’t happen for several years after the general economy turns around.
February 6th, 2009 at 10:59 am
Agreed. But ‘battening down the hatches” now will make them that much stronger on the rebound.