Follow Up: What Me Worry?

I find it somewhat interesting that this week's Export Development Canada Weekly Commentary was written by former EDC chief economist Stephen Poloz. Poloz was reportedly a potential candidate for president of the Bank of Canada just a couple of years ago. He has since moved to SVP of EDC's Financial Products Group. Since then, Peter Hall has taken Poloz' place.

What is interesting is that, as I indicated last week, Hall's take on the issue in general was so objectionable. I felt so strongly about this (and I still do) that I was compelled to reason that the economics profession doesn't even know what it's referring to anymore these days.

And yet, Poloz, who I have had the pleasure of having heard give speeches and press conferences, and to have met meet a couple of times (although he would not remember me), summarizes the entire economic recession perfectly:

For about six years running, U.S. consumers spent their entire income and as much money as they could borrow. This was facilitated by very willing bankers. The result was a global spending boom that lasted long enough to become seen as a trend, and a financial bubble that fed speculation in almost every financial market on Earth. American consumers will not correct these excesses very quickly – it will take years, and now everyone is paying the price in the post-bubble world.

Virtually no one other than the good people at The Ludwig von Mises Institute have told the story so simply and accurately. For the record, Stephen Poloz is an incredibly witty man, and one of the most knowledgeable economists I've ever met, and this week's commentary is a great demonstration of his acumen.

I'm posting this on my blog first in the interest of fairness: if EDC says something stupid one week, they might very well redeem themselves of that stupidity the following week. (Although, as an instrument of corporate welfare, they have a long way to go before they are completely redeemed.) Second of all, I think it's important to show evidence that there are smart people out there, too. Third, it really is a good synopsis of the recession.