Or at least $805.6 billion as of the end of September, not including debt service and additional reset costs; around $940 billion including interest payments.
As the US economy faces the prospects of stagnant growth or recession, it is of interest to see why the scope for fiscal policy is so circumscribed — that is why is the debt level so high given that in the last year of the Clinton Administration, we were paying down debt? Figure 1 depicts part of the answer (other parts, here).
From Chapter 1 of the IMF’s recent World Economic Outlook (Box 1.2), a set of findings by Jörg Decressin and Marco Terrones:
The econometric results confirm that net capital inflows, financial sector reform, and total factor productivity are good predictors of a credit boom. Net capital inflows appear to have an important predictive edge over the other two factors.
I’ve just finished a new research paper with my former student (and now University of Chicago Professor) Cynthia Wu. In our new paper, we study how increased purchases of crude oil futures contracts by financial investors may have affected the prices on those contracts.
In Saturday’s Wall Street Journal, Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, gave his explanation of what’s wrong with peak oil. Here’s why I don’t find his analysis altogether convincing.
From the preface to Lost Decades, published today (9/19) by W.W. Norton:
The United States … lost the first decade of the
twenty-first century to an ill-conceived boom and a subsequent bust.
It is in danger of losing another decade to an incomplete recovery
and economic stagnation.
In order to not lose the decade to come, the United States will
have to bring order to financial disarray, gain control of a burgeoning
burden of debt, and re-create the conditions for sound economic
growth and social progress. None of this will be easy. The tasks are
made more difficult by the fact, which we have learned to our alarm,
that all too many policymakers and observers cling to the failed
notions that got the country into such trouble in the first place. If
Americans do not learn from this painful episode, and from others
like it, they will condemn the nation to another lost decade.. (p. xvi).
Today, we’re fortunate to have a guest contribution by Jeffry Frieden, Stanfield Professor of International Peace at Harvard University, and coauthor of Lost Decades: The Making of America’s Debt Crisis and the Long Recovery. This article first appeared on Reuter’s Opinion.
Europe’s Lehman Moment
By Jeffry Frieden
Europe is in the midst of its variant of the great debt crisis that hit the United States in 2008. Fears abound that if things go wrong, the continent will face its own “Lehman moment” — a recurrence of the sheer panic that hit American and world markets after the collapse of Lehman Brothers in October 2008. How did Europe arrive at this dire strait? What are its options? What is likely to happen?
Mike Rosenberg (Bloomberg) notes that, when viewing the policy mix from the perspective of fiscal and financial conditions, we are on the following path, even as there is a large amount of slack in the economy [0]:
The analytic chapters were released yesterday.
A vision of what American economic growth over the next decade could look like might also help us address our immediate economic problems.