ECONOMIC SCENE
Why Budget Cuts Don’t Bring Prosperity
New York Times, February 22, 2011
Remember the German economic boom of 2010?
Germany’s economic growth surged in the middle of last year, causing commentators both there and here to proclaim that American stimulus had failed and German austerity had worked. Germany’s announced budget cuts, the commentators said, had given private companies enough confidence in the government to begin spending their own money again.
Well, it turns out the German boom didn’t last long. With its modest stimulus winding down, Germany’s growth slowed sharply late last year, and its economic output still has not recovered to its prerecession peak. Output in the United States — where the stimulus program has been bigger and longer lasting — has recovered. This country would now need to suffer through a double-dip recession for its gross domestic product to be in the same condition as Germany’s. Read more….
Does The U.S. Really Have A Fiscal Crisis?
By Simon Johnson, The Baseline Scenario, 24 February 2011
The United States faces some serious medium-term fiscal issues, but by any standard measure it does not face an immediate fiscal crisis. Overindebted countries typically have a hard time financing themselves when the world becomes riskier – yet turmoil in the Middle East is pushing down the interest rates on US government debt. We are still seen as a safe haven.
Yet leading commentators and politicians today repeat the line “we’re broke” and argue there is no alternative other than immediate spending cuts at the national and state level.
Which view is correct? And what does this tell us about where our political system is heading? Read more….
Phi Beta Iota: The second piece ends where we must begin. No one in Washington is willing to speak the truth or deal with the truth.
Fedor Dostoevsky: A man who lies to himself, and believes his own lies, becomes unable to recognize truth, either in himself or in anyone else.
Bob Seelert, Chairman of Saatchi & Saatchi Worldwide (New York): When things are not going well, until you get the truth out on the table, no matter how ugly, you are not in a position to deal with it.
Daniel Ellsberg speaking to Henry Kissinger: The danger is, you’ll become like a moron. You’ll become incapable of learning from most people in the world, no matter how much experience they have in their particular areas that may be much greater than yours” [because of your blind faith in the value of your narrow and often incorrect secret information].
Alvin Toffler: Information is a substitute for time, space, capital, and labor
Robert Steele: The truth at any cost reduces all other costs…and…Information costs money–intelligence produces wealth.
