Daily Digest »

September 1

What you need to know to navigate today’s most critical debates.

Record number in government anti-poverty programs (USA Today)
As the recovery stalls, one in six Americans are relying on our public safety nets.

Will we ever recover from the financial crisis? (WaPo)
Ezra Klein highlights a study of the aftermath of severe financial crises that may make you regret getting out of bed today.

Tax Cuts Weighed to Spur Economy (WSJ)
President Obama’s economic advisers are considering business and payroll tax cuts and new infrastructure spending, but expect (surprise!) Republican obstruction.

Tax Cuts That Make a Difference (NYTimes)
David Leonhardt writes that tax cuts aren’t a long-term solution to America’s economic…

Surprise, Surprise! Ben Bernanke Discovers the ‘Paradox of Thrift’ (Sort Of)

When consumers are trying to save, the government must step in to create growth.  That’s going to require smart and imaginative fiscal policy.

That “central bankers alone cannot solve the world’s economic problems” was the most extraordinary concession to come out of the mouth of Federal Reserve Chairman Ben Bernanke during last Friday’s speech at the Jackson Hole Economic Symposium.

Of course, he’s right, but, rather than acknowledging that fiscal policy is the most effective counter-stabilisation tool available to national governments, Bernanke still trumpets the idea that monetary policy is the only game in town. Despite huge efforts by the Fed to stimulate…

On Bigness and Reform

“The continuing survival of classical (economic) beliefs protects business autonomy and its income and serve to obscure the economic power exercised as a matter of course by the modern enterprise by declaring that all power rests, in fact, with the market.” — John Kenneth Galbraith

Michael Sandel is a professor at Harvard, who is distinguished in the last few years for one reason; he’s written on the history of American liberalism, particularly its economic roots, from an American perspective. In a new piece, he points out how until a few decades ago, American politicians weren’t so deferential to concentrated economic power.…

Legacy Lessons »

Time to Bring Back the Home Owners Loan Corporation?

The New Deal’s mortgage relief program offers an effective alternative to the Obama administration’s failed strategy.

Continued high unemployment is unfortunately not the only bad piece of economic news that the nation has had to face this summer. It now appears as if the level of home foreclosures will continue at an alarming pace, with many economists now predicting that the number of Americans likely to lose their homes in 2010 will exceed one million — a figure that would surpass the more than 900,000 homes lost to foreclosure in 2009.

With so many homes at risk, the current housing crisis certainly rivals…

Daily Digest »

August 31

What you need to know to navigate today’s most critical debates.

Obama promises new efforts to boost economy (WaPo)
Yesterday’s speech offered few details, but the president called out GOP obstructionism and promised new measures to encourage hiring.

Meet the 18 People Who Could Determine the Fate of Social Security (TPM)
Brian Beutler has the rundown on the members of the deficit commission, their professional backgrounds, and their worrying views on Social Security.

Senator Simpson’s Quick Budget Quiz (HuffPo)
Dean Baker poses seven important questions to the deficit commission’s co-chair and supplies a helpful cheat sheet for the rest of us.

The case against reforming Social Security (WaPo)
Ezra Klein suggests that…

Broken Politics, Bubble Pricing, Environment, and Agriculture

Shed your fears and lose your guilt
Tonight we burn responsibility in the fire
We’ll watch the flames grow higher

As I was standing by the edge
I could see the faces of those who led pissing theirselves laughing
Their mad eyes bulged and their flushed faces said,
“The weak get crushed and the strong grow stronger.”
In the funeral pyre, we’ll watch the flames grow higher
– Paul Weller

However effective you think “markets” are at pricing, one thing you can say is bubbles completely distort pricing mechanisms to the point of being valueless. When you add into that a corrupt political process using government to further distort…

The Real Lesson from the Great Depression: Fiscal Policy Works!

New Attacks on FDR’s New Deal Fueled by Old - and Discredited - Ideology

If the US government had a dollar every time someone proclaimed to learn the lessons of the Great Depression, we probably wouldn’t have a budget deficit. Usually, these debates turn on the question of fiscal policy and whether in fact, FDR’s New Deal had a discernable role in generating recovery. “Fiscal austerians” have done much to dismiss the economic achievements of the New Deal, some even suggesting that FDR’s fiscal policies worsened the crisis.

For a brief period during 2008, the views of neo-liberals like Alan Greenspan and…

Daily Digest »

August 30

What you need to know to navigate today’s most critical debates.

Policy Options Dwindle as Economic Fears Grow (NYTimes)
With no one willing to spend, analysts like Roosevelt Institute Senior Fellow Joseph Stiglitz see little hope of avoiding a Japanese-style economic malaise.

Obama and Jobs — He Should Look to FDR (HuffPo)
Saul Friedman recalls the success of the WPA and the CCC and suggests that they should serve as a model for modern-day recovery efforts.

It’s Not Over Until It’s in the Rules (NYTimes)
The rule-making process at the SEC and CFTC offers Wall Street lobbyists yet another opportunity to undermine the Dodd-Frank reforms.

Obama’s Old Deal (Newsweek)
Michael Hirsh writes that…

Still Too Big to Fail: A Crisis in the Works

The Dodd-Frank bill won’t be enough to stop Wall Street from risking it all and plunging us into another financial crisis.

On August 26, the New York Times joined other, nimbler media in reporting that Wall Street banks were working to frustrate the intent of the financial reform legislation. Proprietary trading (or, more precisely, its Avatar) has appeared in the form of client transactions which allow the banks to take risk-based market positions. It is the same behavior and the same traders, but in a different department.

Everyone who is surprised that Wall Street is beavering away to circumvent reform is invited to…

Daily Digest »

August 27

What you need to know to navigate today’s most critical debates.

This Is Not a Recovery (NYTimes)
Paul Krugman argues that the academic definition of recession is irrelevant if growth isn’t strong enough to bring down rampant unemployment.

Tough calls after bungee jump recovery (FT)
George Magnus writes that monetary tightening might make sense for some countries right now, but the U.S. isn’t one of them.

Fiscal Austerity and America’s Future (NYTimes)
Simon Johnson suggests that austerity proponents are encouraging greater social inequality and setting the U.S. back on the path to financial crisis.

A stickier problem (The Economist)
Increases in structural unemployment may require more narrowly tailored responses than the broad…