Friday, November 5, 2010

Washington Post Editorial: The problem with the economy? Confidence.

After I posted my comment on QE2 this morning, this editorial from the Post authored by David Smick arrived in my email.

This may be what Bernanke is thinking, and why he hopes the QE2 is the answer:

Recovery will be a long, hard slog, and our national mood could make the difference between success and failure. Fortunately, America's problem is not a lack of money. Nor is it a lack of adequate stimulus. It is a lack of confidence. Between $2.5 trillion and $4 trillion of private capital is waiting on the sidelines to "reliquify" a new era of American confidence and innovation.

Drawing in that money requires bipartisan leadership. Obama has two years to persuade Americans, as journalist David Brooks put it, "to salivate for the future again." It seems unlikely that will happen without a bipartisan effort to reduce our deficits and debt, to provide certainty about future rates of taxation and to reform a badly slipping public educational system without increasing our debt.

David M. Smick - The problem with the economy? Confidence.