The latest economic data have dashed any hope of a quick end to Americas job drought, which has

already gone on so long that the average unemployed American has been out of work for almost 40 weeks !et there is no political will to do anything about the situation "ar from being ready to spend more on job creation, both parties agree that its time to slash spending # destroying jobs in the process # with the only difference being one of degree

$or is the "ederal %eserve riding to the rescue &n Tuesday, 'en 'ernanke, the "ed chairman, acknowledged the grimness of the economic picture but indicated that he will do nothing about it And debt relief for homeowners # which could have done a lot to promote overall economic recovery # has simply dropped off the agenda The e(isting program for mortgage relief has been a bust, spending only a tiny fraction of the funds allocated, but there seems to be no interest in revamping and restarting the effort The situation is similar in )urope, but arguably even worse *n particular, the )uropean +entral 'anks hard,money, anti,debt,relief rhetoric makes -r 'ernanke sound like .illiam /ennings 'ryan .hat lies behind this trans,Atlantic policy paralysis0 *m increasingly convinced that its a response to interest,group pressure +onsciously or not, policy makers are catering almost e(clusively to the interests of rentiers # those who derive lots of income from assets, who lent large sums of money in the past, often unwisely, but are now being protected from loss at everyone elses e(pense &f course, thats not the way what * call the 1ain +aucus makes its case *nstead, the argument against helping the unemployed is framed in terms of economic risks2 3o anything to create jobs and interest rates will soar, runaway inflation will break out, and so on 'ut these risks keep not materiali4ing *nterest rates remain near historic lows, while inflation outside the price of oil # which is determined by world markets and events, not 5 6 policy # remains low And against these hypothetical risks one must set the reality of an economy that remains deeply depressed, at great cost both to todays workers and to our nations future After all, how can we e(pect to prosper two decades from now when millions of young graduates are, in effect, being denied the chance to get started on their careers0 Ask for a coherent theory behind the abandonment of the unemployed and you wont get an answer *nstead, members of the 1ain +aucus seem to be making it up as they go along, inventing ever,changing rationales for their never,changing policy prescriptions .hile the ostensible reasons for inflicting pain keep changing, however, the policy prescriptions of the 1ain +aucus all have one thing in common2 They protect the interests of creditors, no matter the cost 3eficit spending could put the unemployed to work # but it might hurt the interests of e(isting bondholders -ore aggressive action by the "ed could help boost us out of this slump # in fact, even %epublican economists have argued that a bit of inflation might be e(actly what the doctor ordered # but deflation, not inflation, serves the interests of creditors And, of course, theres fierce opposition to anything smacking of debt relief .ho are these creditors *m talking about0 $ot hard,working, thrifty small business owners and workers, although it serves the interests of the big players to pretend that its all about protecting little guys who play by the rules The reality is that both small businesses and workers are hurt far more by the weak economy than they would be by, say,

modest inflation that helps promote recovery $o, the only real beneficiaries of 1ain +aucus policies 7aside from the +hinese government8 are the rentiers2 bankers and wealthy individuals with lots of bonds in their portfolios And that e(plains why creditor interests bulk so large in policy9 not only is this the class that makes big campaign contributions, its the class that has personal access to policy makers # many of whom go to work for these people when they e(it government through the revolving door The process of influence doesnt have to involve raw corruption 7although that happens, too8 All it requires is the tendency to assume that whats good for the people you hang out with, the people who seem so impressive in meetings # hey, theyre rich, theyre smart, and they have great tailors # must be good for the economy as a whole 'ut the reality is just the opposite2 creditor,friendly policies are crippling the economy This is a negative,sum game, in which the attempt to protect the rentiers from any losses is inflicting much larger losses on everyone else And the only way to get a real recovery is to stop playing that game