From the Washington Post:
…”If this guy [Fed Chairman Bernanke] prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous, or treasonous, in my opinion.”
Earlier this year, disruptions in Libya and the resurgence of demand from the emerging economies sent oil prices up sharply, a development that many economists believe contributed to the slow growth for 2011:H1. The chaotic markets of the last few weeks saw oil prices drop back down to where they had been in December. Will that be enough to revive the struggling U.S. economy? There is some evidence suggesting that it may be too late.
This morning, I was a guest on WHYY’s Radio Times with Marty Moss Coane. The other panelist was Phill Swagel, and topics covered the stock market, the stimulus, and the state of the economy. One can hear the podcast here: [mp3].
And Generalissimo Francisco Franco is still dead (with apologies to the under 35 set).
Since in the U.S. we are currently embarking upon a program of reducing fiscal stimulus, it seems useful to examine whether this action would result in rapid economic growth as some have predicted. The UK is at the forefront of conducting this fiscal experiment.
On Friday, Standard & Poor’s, one of the three main credit rating agencies, downgraded U.S. Treasury debt from AAA to AA+, citing doubts about the effectiveness, stability, and predictability of American policymaking and political institutions in being able to deal with the rising debt burden by the middle of the decade. It’s been a wild ride for equity and commodity markets ever since.
And dispensing with childish things, such as the belief that our economic future can be secured by spending cuts alone. From “The Downgrading of a Debtor Nation”, by me and Jeffry Frieden, in today’s New York Times:
THE Treasury can cry foul all it wants, but the decision by Standard & Poor’s to downgrade America’s credit rating by one notch last Friday, and the subsequent plunge in the stock market, are serious symptoms of a loss of confidence — an assessment that is fundamentally political, not economic.
Joe Gagnon (formerly associate director of Monetary Affairs, and of International Finance, Divisions at the Fed) of the Peterson Institute for International Affairs has had enough with the policy paralysis . From Stop Sticking Our Heads in the Sand! A Plan for Action on Jobs:
…our leaders have been in denial about the true nature and magnitude of the problem. The ongoing stock market anxiety surely must wake them up.
There has been a lot of growth over the last decade in funds that take long positions in commodity futures contracts in order to offer investors an asset that follows raw commodity prices. I’ve been looking into some of the data that have been used to measure the size of those positions.
There is plenty of commentary on the S&P decision, including S&P’s difficulties with math, but I do find of salience this part of the release:
Professor Scott Sumner says “No more jobs mystery. Period. End of story.”. I’m not so certain.
From the post:
If I hear one more discussion of the mysterious lack of jobs I’ll explode. The new GDP numbers are the final nail in the coffin. For years I’ve been saying there is no jobs mystery. That any deviation from Okun’s Law was minor compared to the scale of the output collapse. With the new RGDP figures we now know I was right, there isn’t and never was any mystery as to why there are so few jobs. RGDP is very low. Period. End of story.