Trump’s Perfect Storm that Could Sink the American Economy
Donald Trump has steered the American economy into a perfect storm. In the book, film, and now in real life, a rare combination of destructive forces comes together and magnifies the damage. This storm could break the U.S. economy. Trump’s tariffs are the most destructive force. Their first-order damages begin by arbitrarily driving up the prices of every product and… 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
Congress Acts: A Little Better Than Nothing
The $750 trillion bailout plan that the Senate approved, and which the House is expected to endorse reluctantly, could give us all a little more breathing room in the current economic crisis, but it won’t resolve anything. It’s much the same plan the House voted down a few days ago, with a bushel of tax breaks calculated to draw more…Continue reading