The proposed stimulii for the US and UK are useless. Useless in the sense of unavailing. Both economies are dysfunctional. Real activities do not much their need to pay their way. Both have burdensome fiscal and trade deficits. The stimulii totally fail to address these problems. They are more likely to amplify them
The problem was caused by too much debt. The problem continues to be too much debt. The cure is not more debt. For debt is money and pushing more money into the system, as Friedman pointed out long ago, has but a temporary effect on the reals and eventually emerges in higher prices with little change in real output. It is really very simple.
What is complex is getting the real economy adjusted. This is politics; the clash of interests. Politicians are forced to act, "to do something". People are not going to believe they cannot do something, and since acting gives politicians and bureaucracies added power of course they embrace it with enthusiasm. They have celebrity status.
But to stimulate in the way now proposed and activated is like saving a non-swimmer from drowning. It may work in the sense of keeping him or her alive but the act of saving does not mean the non-swimmer can now swim.
For the US and UK especially resources must be switched into manufacturing and services that can be exported. People cannot eat legal briefs, options, derivatives, balance sheets, tax plans. And the BRICS and Asians are certainly not going to allow Western grads do it for them.
Finance, retail and real estate are shrinking naturally for they have no option. Manufacturing is under great pressure. But this is the nub of the problem. The public sector resists shrinking and is non-exportable almost by definition. Government and politicians do not respond to price signals to economise they fight them - with public funds.
But the restoration of balance in trade rests on the private sector so too does fiscal balance, for its resoration depends on real growth and that growth essentially comes from the private sector.
