The governor of Washington State thinks famed banking analyst Meredith Whitney is wrong.
Responding to Whitney’s comment in late September that states resemble banks just before the financial crisis, Governor Christine Gregoire, a Democrat, said, “We’re in crisis mode. We the states are not in pre-crisis at all.”
Asset buying programs are the idea du jour as governments scramble to do something (“anything!”) to avert renewed weakness in the global economy. There seem to be no good choices in the near term, so governments are reaching for cosmetic fixes to try and make things appear better than they are. In the medium and longer term though there are several wise places to spend government dollars. One stand out example is the American education system. A recent study found that an investment of just over $300 billion is needed to repair and renovate dilapidated US schools into a reasonable level of health and function. Mould and disrepair are impeding the ability of many schools to teach their pupils, asthma and related health problems are literally keeping kids from coming to school in some areas. This is ridiculous and an embarrassment in the wealthiest nation in the world. $300 billion would have sounded like a lot a few years ago, but after spending trillions on bank bailouts and questionable wars, what's 300 billion more on the line of credit?
My thought: we will need as many educated, equipped, hard working young people as we can cultivate for the future in order to help pay back the debt created by the poor leadership and habits of the past 20 years. Baby boomers are being followed by a lot less population to help carry them in their old age; it is in everyone's best interest to invest in the education system now. QE 2 should stand for “Quality education”, not more of the pointless and empty asset pumps that have been attempted repeatedly over the past 3 years.
Meanwhile facing the prospects of renewed recession again in 2011, Japan is now also talking about asset purchases to weaken the Yen and revive sagging exports. Bad plans are in vogue everywhere it seems.
Ms. Park was a guest yesterday on HoweStreet.com radio talking about recent market trends and the prospects for QE2.
You can listen to the 18 minute segment here.
