Empirical Based Reality

Here are some words which bring us back to economic reality from the kind of ideological bubbles and cynical fundamentalisms which reined for the last eight years:

"What is Mr. Walker’s approach to subprime crisis today? It is to use the crisis as a rhetorical springboard, in order to divert the conversation back to what he calls the “super sub-prime crisis associated with the federal government’s deteriorating finances…”

But the fact is, the subprime crisis is real. The collapse of interbank lending is real. The collapsing stock market is real. The disintegration of the financial system is real. The collapse of the housing sector is real. The credit crunch and the recession are real. You can see this in the interest rate spreads and in the credit that is unavailable at any price.

Mr. Walker’s “super subprime crisis” of the federal government is not real. It is a pure figment of the imagination. It is something Mr. Walker sees in his mind’s eye. He sees it in his budget projections. He sees it in his balance sheets, which are the oddest balance sheets I’ve ever seen, because they have all liabilities and no assets..."

James Galbraith