Here comes the yuan devaluation

Notice that whenever an economic prediction turns out to be correct these days, it’s almost never made by a Keynesian or a Monetarist:

“Technicals say it is time to bail out. Cut equity expose and prepare for rout. US depression looking likely. While China’s 2009 implosion could get ugly.”

Mr Edwards — who is of an “Austrian” persuasion, ie hates excess debt — was one of the very few economists to see this whole crisis coming, and to issue warnings clearly and emphatically (unlike others who now claim to have been seers, but in fact hedged). He said interests rates would be slashed to zero and that bond yields would fall to the lowest in history. All this has occurred.

Those who listened to the Voxonomics interview with Passport may recall his strong doubts about the Chinese economy some six months ago. Meanwhile, one of the few economically sane NROniks, Brian Riedl, shows some of the huge flaws in the latest Keynesian “stimulus” plan:

Policymakers are basing the “stimulus” bill on economic models that wrongly assume every $1 of government spending increases the economy by approximately $1.60. Is it really that simple? By that logic, debt-ridden, big-government countries like Italy, France, and Germany should be wealthier than America. And why stop at $800 billion? Such logic suggests unlimited prosperity could be guaranteed by the government borrowing and spending $800 trillion. Should America be basing such costly decisions on these types of economic models?

This should be easy to compare to the last contractionary go-round. If anyone wants to run the numbers, go for it. Just compare federal spending from 1932 to 1940 to the GDP and see if there is a $1.60 increase in the latter for every $1 increase in the former. In the meantime, we’ll be tracking that this year just as we’ve tracked NAR’s 2008 housing prices.

Meanwhile, Republican protests sound more than a little thin based on their performance over the last eight years:
“I just can’t tell you how shocked I am at what we’re seeing. You know it’s clear that they’re moving on this path along the flawed notion that we can borrow and spend our way back to prosperity.”