Category Archives: Macroeconomic policy

Guest Post: The Tax Code ENCOURAGES Leverage

Among the most prophetic voices prior to the economic crash was UCLA economics professor Harold H. Somers, who warned in 1991 that revisions to the tax code would increase leverage, which could lead to economic disaster: The result is to tilt the well-worn playing field even more in favor of leveraging, leading to the possibility […]

Guest Post: Instead of Fixing the U.S. Economy or Creating Jobs for AMERICANS, Obama Will Spend The Money in Afghanistan and Iraq

America is in the most severe unemployment crisis since – and perhaps including – the Great Depression. And yet Obama, like Bush, has done virtually nothing to create more jobs. Instead, they both gave trillions to the biggest banks (who are not loaning it out to the little guy) and for waging wars in Afghanistan […]

A few thoughts about the limitations of government

By Edward Harrison of Credit Writedowns. In this post: A few thoughts about the limitations of government Our founding fathers How large should government be? How policy helps frame the debate Where we are headed In a recent post, “Stop the madness now!” I voiced my growing concern with the direction in which the country […]

“Does US need a second stimulus to create jobs?”

Reader Doug Smith was not happy with an article in the Christian Science Monitor yesterday, titled, “Does US need a second stimulus to create jobs? His remarks: Could you, Edward or someone consider reading this article and responding to it? My sense is that it perfectly captures ‘conventional wisdom’ and, in that sense, is a […]

Obama: Debt could cause a double dip recession

By Edward Harrison of Credit Writedowns Barack Obama has now come clean about his thinking on why his administration has decided to focus first on reducing the deficit and next on jobs. He fears a double-dip recession will occur if foreigners lose confidence in the U.S. dollar, causing interest rates to spike. This is nonsense […]

“Should America Kowtow to China?”

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Another Presidential junket to Asia and another one of the usual lectures from China, decrying our “profligate ways”. Today’s Wall Street Journal reports:, “China’s top banking regulator issued a sharp critique of U.S. financial management only hours before President Barack […]

Guest Post: “War ALWAYS Causes Recession”

By George Washington of Washington’s Blog. PhD economist Marc Faber predicts that the U.S. will launch a war to distract people from the bad economy. China’s largest media outlet – Sohu.com – wrote in October 2008 that the Rand corporation, a leading U.S. military advisor, lobbied the Pentagon for a war to be started with […]

“President Obama, deficit terrorism is not the answer!”

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Oh dear, there he goes again. After sensibly calling for a jobs summit to deal with the problem of rising unemployment, President Obama’s Herbert Hoover-like alter ego has re-emerged again to warn us again about the evils of government deficit […]

Guest Post: Confirmed – Defense Spending Creates Fewer Jobs Than Other Types of Spending

Yesterday, I pointed out that a study by one of the leading economic modeling companies shows that military spending increases unemployment and decreases economic growth. I have located (giant hat tip to Gordon) a paper by economist Robert Pollin published in 2007 by The Political Economy Research Institute at the University of Massachusetts, Amherst – […]

Unemployment insurance for the 21st century

By Edward Harrison of Credit Writedowns L. Randall Wray has a post up at New Deal 2.0 which puts forward an idea which is pretty innovative. I would label it a private sector replacement for unemployment insurance. It’s the kind of thinking that might bring Obama out of a policy cul-de-sac as the economy hemorrhages […]

Trouble looms in Ireland after debt cut two notches and deficits soar

Submitted by Edward Harrison of Credit Writedowns I am posting this in the interest of widening the discussion at Naked Capitalism to include some topics in Europe. Fitch, the credit rating agency, has just downgraded the sovereign debt ratings for the Republic of Ireland from AA+ to AA-. That is two notches and is proof-positive […]

Guest Post: Take the Power to Create Credit Away from the Giant Banks and Give It Back to the People

By George Washington of Washington’s Blog Many people – including former analyst for the U.S. Treasury Richard Cook – argue that credit is too important a function to be left to the private banks. Indeed, even after taxpayers have given trillions in bailouts, backstops, guarantees, and other gifts, the giant banks are still not lending […]

Bullish data, recoveries, crashes and the psychology of forecasting redux

By Edward Harrison of Credit Writedowns If you have been wondering whether a statistical recovery is at hand, today’s ISM manufacturing report should be the clincher. The report was definitely bullish with the ISM index rising to 55.7 and sub-components supporting the understanding that the manufacturing sector is expanding. This is quite a contrast to […]

Guest Post: Aggressive Fiscal Stimulus Spending Only Shortens Recessions by Two Quarters

By George Washington of Washington’s Blog. Keynesians argue that we must increase fiscal stimulus to prevent a full-scale depression. They argue that “deficit hawks” are wrong when they say that we can’t afford any more stimulus, and that worrying about debt in a crisis of this size is penny wise and pound foolish, given the […]