First Base: The Eurozone worked very well to increase the economic welfare of its poorer members during the economic expansion of 2002-2008, but it is becoming increasingly clear that the interconnected character of the economies of Eurozone, together with the sacrifice of sovereign currencies in favor of the Euro managed by the European Central Bank, creates institutional rigidities and solvency problems that impede the formulation of counter-cyclical policies in these countries when their economic growth stagnates. The attached two articles describe how these rigidities could spillover to feed back on and push the US into a double dip recession or an extended period of stagnation.
Is Tim Geithner Paying Attention To the Global Economy? By Peter Boone and Simon Johnson, Baseline Scenario, 6 Feb 2010
Second Base: Should the Nature of a Sovereign Currency Be Considered When Shaping a Counter Cyclical Economic Policy? A political consensus is emerging in the US to cut back on deficit spending, even though the US economy is at best in the early stage of recovering from a steep recession, or at worst on the cusp of a double dip recession, or even worse, a debt deflation. This is a very dangerous possibility, made more so by a morally bankrupt political decision-making system that runs more in accordance with the rhythms of soundbytes and simplistic slogans.
Continue reading “Journal: Chuck Spinney Triple on Economic Reality”
