On one hand, I really hate the Economist. It's a magazine that thinks an ideology, a smart tone, and providing the only decent coverage of world events widely available makes for a compelling magazine. Even if that coverage is ridiculously biased and not really knowledgeable about facts on the ground. On the other, it's perhaps the pre-eminent mouthpiece for the ruling Anglo-American elite, and it's comforting that t…
The Economist would be a lot more credible if it admitted that yes, they want the Germans to subsidize the Greeks and no, there is no plausible scenario under which those subsidies end.
Absent that, they look as rhetorical as anyone, if somewhat better written.
"Bold" action by the politicians and the central banks created much of the current mess. If we'd just cleared the pipes by letting the banks fail, recapitalizing new banks, and basically rebooting the financial system, we'd be much further along. Instead, we got bailouts and crony capitalism and ad hoc intervention, and today the global system is in many ways in worse shape now than in 2008. (Banking is more concentr…
"Bold" action by the politicians and the central banks created much of the current mess.
No, bold actions by financial instrument designers, sellers and buyers created much of the current mess. Agreed on the crony capitalism and ad hoc intervention, and the real shame is that the cowboys who got us here did great out of the deal, but let's lay the blame appropriately.
"Bold" action by the politicians and the central banks created much of the current mess. The problem is a lack of boldness. Bold regulation on banks and insurance companies is necessary. If we're going to do bailouts, we had better make sure the same misbehaviors can't happen again. In the U.S., we're fucking up my trying to fix failing institutions in-place. No management changes. No meaningful regulations. Often th…
Herbert Hoover is a bit more complicated than even your more nuanced take on him. He did come to a somewhat activist government in the second half of his term. Of course, his real but somewhat muted response to the Great Depression led FDR to attack him. But from the Right, using populist rhetoric about government debt and wasteful bureaucrats. Hoover wasn't evil as you point out, but nor was he an ideologue who refu…
Barely. People like to quote a statistic about how federal spending as a % of GDP went up in the second half of his term, but the GDP was shrinking then.
The chart says total tax burden so I'm assuming it takes into account state taxes. The one chart indicates an average for the U.S. of around 26%. This would be a 2% increase from what it is today. In a $10 trillion economy this would be a $200 billion tax increase. Given that borrowing rates are so low right now an awful lot of money can be borrowed before the budgetary burden reaches $200 billion in additional annua…
Total tax burden is a vague term. They could easily mean total Federal tax burden since they're comparing countries. This NY Times article pegs the total U.S. Federal tax burden at 20.7% which makes the numbers you quote seem dubious http://economix.blogs.nytimes.com/2009/04/08/how-much-americ...
Tax burden is not a vague term. They define it in the charts. Total tax burden is the percent of GDP that is tax revenue. The link you gave talks about effective tax rate. This is very much different than the percent of GDP collected in taxes.
When discussing "bold action" to save the economy, we should really be reevaluating the incentives of the traders on Wall Street.
This makes me think of Mark Cuban's article "What Business is Wall Street In?"
These traders on Wall Street have little interest in creating capital for the companies that stem innovation. Their main incentive is profit, even if it means making money off economic downswings. We need to put them back on the proper track via taxes or a complete restructuring of the capital gains system.
I agree with OstiaAntica. This Economist article is a thinly veiled call for more debt and more inflationary spending. Who stands in the way of "recovery" ? The obstinate Germans (who learned the lesson of hyperinflation last century) with the only sound Euro economy, i.e. they will be paying for the bailouts. In the USA its the Tea Party and the few Republicans with a spine who recognize that the problem is the mass…
The are numerous examples of countries having a larger debt to GDP ratio than the United States who recovered nicely from such debt ratio. In the U.S. taxes are around 24% GDP which is quite low relative to the rest of the industrialized world and quite low relative to our recent past (50 years). Raising taxes will counteract any hyper inflationary forces. Increasing the debt for the U.S., given that the borrowing ra…
> The are numerous examples of countries having a larger debt to GDP ratio than the United States who recovered nicely from such debt ratio.
The US debt to GDP ratio is rapidly approaching 100%
letting the banks fail, recapitalizing new banks, and basically rebooting the financial system Please tell us how that works in practice rather than in theory. I really, really want to know how you just 'reboot' the financial system without massive disruption to retail banking or the payments system. How do you 're'capitalize a new bank? If you just mean create new banks, who is running these banks? I mean, I'd like…
Contrary to what some pundits would like you to believe, this is not new ground. A real estate bubble followed by a balance sheet recession has happened in at least 2 other places before: Sweden in 1992 and Japan in 1991. Different choices in these countries led to different outcomes. In Sweden, the government demanded steep losses from equity holders before it took over a large part of the financial system (unlike U…
This also happened in Iceland recently with a revolt and de-privatization of the banks.
Obama class warfare? No sign of it. I think Obama's a great human being, but he's a essentially a conservative by any sane standard. With the economic stance he holds now, he'd have been a Republican in 1970 (a time in which Republicans were not all horrible).
If Obama is your idea of a Republican, I don't want your idea of a Democrat in office...ever.
The horror... you might just end up like Germany or France.
letting the banks fail, recapitalizing new banks, and basically rebooting the financial system Please tell us how that works in practice rather than in theory. I really, really want to know how you just 'reboot' the financial system without massive disruption to retail banking or the payments system. How do you 're'capitalize a new bank? If you just mean create new banks, who is running these banks? I mean, I'd like…
Contrary to what some pundits would like you to believe, this is not new ground. A real estate bubble followed by a balance sheet recession has happened in at least 2 other places before: Sweden in 1992 and Japan in 1991. Different choices in these countries led to different outcomes. In Sweden, the government demanded steep losses from equity holders before it took over a large part of the financial system (unlike U…
I don't listen to media pundits. I'm asking the grandparent poster for specifics of how s/he intends a reboot of the entire financial sector because I think this is actually a rather hard problem. I have been through a real estate bubble followed by a recession before (in the UK, at the same time as the Swedish one). I think there are some definite upsides to the Swedish approach, but the people who keep bringing it up seem to overlook the fact that Sweden is a) small - <10 million people, not much more than NYC and b) one of the highest-taxed economies in the world, with tax revenues equal to almost 50% of GDP, and c) is regulated out the yin-yang. The idea that we can just lift one bit of regulatory policy from there, apply it to our financial sector, and call our problem solved is not just misguided, it's flat-out magical thinking.
letting the banks fail, recapitalizing new banks, and basically rebooting the financial system Please tell us how that works in practice rather than in theory. I really, really want to know how you just 'reboot' the financial system without massive disruption to retail banking or the payments system. How do you 're'capitalize a new bank? If you just mean create new banks, who is running these banks? I mean, I'd like…
Contrary to what some pundits would like you to believe, this is not new ground. A real estate bubble followed by a balance sheet recession has happened in at least 2 other places before: Sweden in 1992 and Japan in 1991. Different choices in these countries led to different outcomes. In Sweden, the government demanded steep losses from equity holders before it took over a large part of the financial system (unlike U…
Lets not forget Argentina. Whose currency collapsed along with their central bank. They survived.