I'm betting Obama will lose now and Bernanke will have an awful legacy.
The Lousy Jobs Number & Obama's Original Sin by Noam Scheiber
Which, in the end, brings us back to the original sin of the Obama administration. As I report in my recent book on Obama and the economy, the administration’s top economists knew the amount of stimulus they were proposing was much too small to solve the unemployment problem within a few years. One reason they felt okay about this relates to a concept called “escape velocity,” which held that you didn’t need the full amount of stimulus your math suggested (something approaching $2 trillion). If you just provided an initial boost, the economy could take care of the rest on its own: Consumers would start spending, which would raise GDP, lower unemployment, and lead to further spending. And the whole process would accelerate as people gained confidence, leading to a self-sustaining recovery.
It was, in effect, a bet that you could get away with spending much less than necessary by manipulating mass psychology. And for a while it worked: The economy grew pretty rapidly in late 2009 and early 2010. But, as several administration economists have subsequently conceded to me, we never quite hit escape velocity, which is why we’ve been in stall speed more or less ever since.
A central-bank failure of epic proportions by Ryan Avent
The Austerity Agenda by Krugman
The answer is
that an economy is not like an indebted family. Our debt is mostly money
we owe to each other; even more important, our income mostly comes from
selling things to each other. Your spending is my income, and my
spending is your income.
So what happens if everyone simultaneously slashes spending in an
attempt to pay down debt? The answer is that everyone’s income falls —
my income falls because you’re spending less, and your income falls
because I’m spending less. And, as our incomes plunge, our debt problem gets worse, not better.
This isn’t a new insight. The great American economist Irving Fisher
explained it all the way back in 1933, summarizing what he called “debt
deflation” with the pithy slogan “the more the debtors pay, the more
they owe.” Recent events, above all the austerity death spiral in
Europe, have dramatically illustrated the truth of Fisher’s insight.
And there’s a clear moral to this story: When the private sector is
frantically trying to pay down debt, the public sector should do the
opposite, spending when the private sector can’t or won’t. By all means,
let’s balance our budget once the economy has recovered — but not now.
The boom, not the slump, is the right time for austerity.
Really depressing stuff. Then I saw the movie
Bernie and it cheered me up. If you like Jack Black, Richard Linklater and the South then you'll love this movie.
