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VOLUME 11
ISSUE 17
listeningin
SEPTEMBER 11, 2009
RESEARCH
Reprinted with permission of
DISCLOSURES PAGE 19 welling@weeden SEPTEMBER 11, 2009 PAGE 1
But since Wolf’s piece came out, I’ve been invited have to have fiscal stimulus centered on govern-
to give presentations to numerous governments ment spending for the entire duration of the
around the world, trying to explain what actually period in which the private sector is minimizing
Kathryn M. Welling happened to Japan and why something similar can debt, Larry actually was promoting, until not
Editor and Publisher happen in other parts of the world, as well. too long ago, the idea of the “three T’s.” Saying
welling@weedenco.com that fiscal stimulus had to be “targeted, timely
Published exclusively Which ones? and temporary.” That last part of his argument,
for clients of The Dutch government was the most anxious to “temporary,” is extremely dangerous in this
Weeden & Co. LP see me. They said, “Just come over. We’ll pay type of recession.
for everything.” So I made that trip. Spent two
Lance Lonergan
full days with a few ministers and many top- Why do you say that?
National Sales Manager
(800) 843-9333 or ranking bureaucrats, talking about balance Because until the private sector is finished
(203) 861-7670 sheet recessions. I have also been invited to the repairing its balance sheets, if the government
lance@weedenco.com Bank of England’s policy round table. I was tries to cut its spending, we’re going to fall into
Thomas Orr invited by the Central Bank of Kazakhstan, by the same trap President Franklin Roosevelt fell into
Director of Research Poland. I’ve done a presentation for the English in 1937, and that Prime Minister Ryutaro
(800) 843-9333
tom_orr@weedenco.com
Finance Ministry; one to Australia’s Treasury. Hashimoto fell into in 1997, exactly 70 years later.
Which are?
The main one is that once we’re in a balance
sheet recession, as we are globally today, we will
never come out of that recession until the pri-
vate sector balance sheets are repaired. In the
meantime, governments can do a lot of things
to prop up the economies, but for the
economies to stabilize and then return to self-
sustaining growth, we need to have private sec-
tor balance sheets in good enough order — and
that takes a while.