Year end is time for summaries and if one can summarize this administration's achievements on the economic front, it would be thus:  It has bankrupted the institution of bankruptcy for the banks that matter.  As a consequence, interest rates, calculated on the probability of payback, have been thrown out of whack.  

Yes, the Fed sets interest rates but those are for the safest of instruments backed by the U.S. Treasury.  These establish a floor for riskier instruments, the rates for which are then set by the market, based on calculations of that risk.  But the free flow of capital has been log-jammed by political forces.  Today, banks that should be bankrupt are being rescued and their lenders paid back on terms set by political leaders.  Yet, who knows how political winds will blow tomorrow.  By outmoding bankruptcy, they have succeeded in upsetting a basic tenet of capitalism (on which is based its efficiency), i.e. to ensure the survival of the fittest.

A palliative for chronic ailment, the payroll tax rollback (which amounts to a daily latte' at Starbucks) has been much in the news as a political football.  As Keynes observed many, many decades ago, doling out money in an economy burdened with trade deficits merely fortifies the economies of the trading partners.  So if not a cup of coffee (from Brazil, Colombia or wherever), then perhaps other consumer goods (toys, TVs, electronics) all from China, Japan and East Asia.  Well, it helps retailing here and transportation.  The question remains:  do we have the will to start training / retraining programs and investment incentives to bring back well-paying manufacturing jobs?

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