Global Investors Are Telling Donald Trump His Deficits and National…
Washington is unnerved these days about budget deficits and the national debt. Deficit angst comes along periodically, often as a pretext for cutting social spending. This time, however, there’s genuine cause for alarm. Outsized deficits are par for the course when the economy is in recession or reeling from a shock like the pandemic or the financial collapse; most of… Continue reading
Christian Science Economics
The Bush administration, long known for faith-based initiatives, has embraced a new form of faith-based economics to address the financial crisis and cascading recession: We’ll call it an economic version of Christian Science, prescribing modest steps to make the patient comfortable while largely leaving us to heal ourselves. It’s only an analogy, but play along. A succession of debilitating infections…Continue reading
The Politics of Trading Recession for Inflation
On virtually everything economic, the Bush administration and much of Congress have become the gang that can’t shoot straight — and their stray bullets could take down a good piece of the nation’s economic prospects. They have directed hundreds of billions of taxpayer dollars to financial institutions (and soon, auto companies), and they’re getting ready to direct several hundred billion…Continue reading
The Financial Crisis and Crony Capitalism
The financial crisis and the profound economic reversals reverberating around the globe caught up last week with Citigroup, the world's largest financial institution. Citigroup is still solvent, but it holds several hundred billion dollars of heavily-leveraged, troubled assets — and once the market began to focus on the potential losses, as it did last week, the bailout became a foregone…Continue reading
If Detroit Goes Down, Will It Take the Economy —…
In a remarkable spectacle, an Administration with a sustained record of economic blunders and failures finds itself aghast at the mistakes and mismanagement of U.S. automobile companies. Imagine Confederate General John Pemberton, after leading his forces to an historic defeat at Vicksburg, dismissing his cook for squandering the rum rations. Yes, America’s big three automobile makers (with an assist from…Continue reading
It’s 1980 again, not 1932
While nearly everyone recognizes that the current financial crisis is the worst since the Great Depression, the economic challenges and the changes in the political landscape hearken back more to 1980 than to 1932. The distinction matters, because a misplaced metaphor or inapt historical analogy that takes hold of the political imagination can produce serious missteps. In 1932 and 1980…Continue reading
Stimulus for the Long Run
When Congress returns to Washington following the election, its first priority will be to pass another stimulus package for the sinking economy. It’s already clear that the package will involve about $200 billion in new stimulus or a boost equal to about 1.4 percent of GDP. The question is what form should the package take. The path of least political…Continue reading
Who’s in Charge?
As American tangle with an accelerating economic downturn, scarily-volatile stock markets, and an array of bailout and other emergency programs, yet another pitfall has become apparent: There’s no one at the helm of the economy or efforts to help it. President George W. Bush is nearly entirely absent, the Treasury Secretary cannot commit the nation to new policies, and now…Continue reading
Nothing to Fear More than Fear Itself
Congress tried late last week to stall the financial crisis by pledging to spend $700 billion on devalued securities held by financial institutions, and by Monday morning it was clear that the pledge wasn’t enough to reassure investors or restart lending. Instead, a classic panic has set in here and around much of the world as public confidence in banks,…Continue reading