There seems to be no limit to policy uncertainties, ranging from Europe’s stuttering response to its debt crisis, to questions about the end of QE2 in the US, the debt ceiling debate, and that still-elusive balance between medium-term fiscal reform and immediate stimulus to counter a weakening economy.
When these issues are discussed, reference is often made to policymakers’ tendency of “kicking the can down the road.” Indeed, this phrase has been used so often that it prompted CNBC’s Joe Kernen and Becky Quick to solicit alternatives from the viewers of Squawk.
It appears that viewers are jumping on the invitation.
Some opted for “postponing the day of reckoning;” others preferred “delaying the inevitable;” and Michelle Caruso-Cabrera, who is reporting from Athens this week, proposed “extending and pretending.”
These are all great. My favorite, however, is a phrase suggested to me by a viewer of CNBC after I appeared on Squawk yesterday: “pushing a snowball down the hill.”
I like the phrase because it captures more than just the notion of delay. It also indicates that the size of the underlying problem gets bigger in the interim; and the phenomenon itself accelerates.
This is most visible in Greece where the situation has become critical.
European policymakers and the IMF have spent the last year treating the country’ predicament as a liquidity problem as opposed to what it is: a solvency and growth crisis. Unsurprisingly, and despite a massive bailout package and large sacrifices on the part of the Greek population, every single economic and financial indicator has markedly deteriorated. Indeed, the deterioration has gone well beyond the policymakers own expectations.
