I live in New York City. I talk to a lot of businesspeople, investors, and Wall Streeters. I don’t talk to all that many ordinary people. But I enjoy being interviewed on live radio in other parts of the country. And when I do that, I get the chance to hear what local callers think about the economy, and more importantly, what they want. They | Read More »
Obama has been walking back his rhetoric on trade protectionism. Specifically, the “Buy American” clause in the fiscal stimulus bill now under debate in the Senate. Think about it. We’re getting ready to borrow trillions of dollars that our children will need to repay some day. We’re going to give it to the governors of the fifty states, to spend on teacher salaries, Medicare and | Read More »
Say, has anyone noticed that the stimulus projects which are getting the most negative attention from the press and the public, actually are the ones that orthodox Keynesianism suggests are the best ones to do? I admit that striking the $600 million for condoms hurts no one but the people in China who would have manufactured the condoms. That one is a good strike, because | Read More »
News stories are now rampant that Obama is looking to “compromise” on the fiscal stimulus package. He has no need to do any such thing. Obama has solid Democratic majorities in both the House and Senate, and can pass his legislation without so much as a single Republican vote. I can guarantee you that the Republicans won’t filibuster the bill in the Senate. We have | Read More »
We’re experiencing an economic recession as a result of several global economic imbalances that have been building for years now. Since sometime in the Clinton Administration, growth in US consumption has been funded by steady increases in the private “balance sheet,” or the net level of indebtedness. During the Bush years, growth was also supported by accomodative monetary policy and fiscal deficits. Since the early | Read More »
It’s pretty clear to everyone that the financial industry is not doing what it normally does, which is to extend credit and lend money. Just as clearly, the decline in new credit formation leads to deflation in risk-bearing financial assets, and a sharp contraction in overall economic activity. Less clear are the implications for policy and for business forecasting. Businesspeople are simply confused about the | Read More »
It’s interesting that tax cuts have taken a central role in the fiscal-stimulus debate. (We really should be debating whether a massive fiscal stimulus is even the correct approach to the current economic, housing and financial crises. But since conventional wisdom has already hardened around that, forget about it.) In orthodox Keynesianism (perhaps last seen during the Kennedy Administration), tax cuts were the accepted way | Read More »
Fed Chairman Bernanke is giving a speech at London’s School of Economics. Here’s the Associated Press’s headline: “Bernanke: Obama Stimulus Would Lift Economy.” That’s the spin that the average reader is supposed to take away, if they get nothing else. The AP, like every other mainstream press organization, is so convinced that you’re stoopid, that they try to get away with blatantly biased statements like | Read More »
Go here to read the latest piece of propaganda for the biggest piece of Keynesian stimulus to be proposed since the New Deal. I and plenty of others have been telling you for days that this whole idea was a brainless, kneejerk response to a critical economic situation. There’s been no apparent analysis of the underlying assumptions, and utter disregard of the decades of experience | Read More »
Historic days lie ahead, and not because the occupant of the Oval Office will soon be of an atypical color. The United States, throughout its early history, has been the only major trading nation to carefully avoid extensive government involvement in economics and finance. We went for more than 100 years without even a central bank (meaning, an official lender of last resort). And when | Read More »
Everyone’s attention has temporarily shifted away from the automaker bailout, to consideration of a vast Keynesian stimulus program, with some side-distractions relating to the personnel of the US Senate. Don’t worry about the automaker situation: it’ll be back on the front-burner next month as both GM and Chrysler LLC will have burned through last month’s bailout money and will be back for more. A lot | Read More »
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