On Fiscal Consolidation And Currency Devaluation At The G-20 And Other Links
G-20 Thoughts
I am going to be talking about the G-20 tomorrow at 700 London Time/1200 East Coast Time on BBC World News. The key issue is fiscal consolidation. I am taking the German side of this (see Why I am siding with the Germans on fiscal consolidation) rather than George Soros’ regarding the euro zone (see Soros attacks Germany’s hair-shirt politics).
I may write up something regarding the US and the UK. The short-hand view I have is that, while the UK and US are less constrained, politically, stimulus is a loser. It is already out in the UK and it is unlikely to gain traction in the US. Malinvestment into the FIRE sector is the key issue which hangs over stimulus as a policy tool (seePrison inmates among those abusing home buyer tax credit – USATODAY.com). I hope to explain why in greater detail a future post.
Irrespective there are other issues like competitive currency devaluations (More on Competitive Currency Devaluations) which loom, especially given the still acrimonious China-US currency relationship.
Also see:
- Has stimulus become a dirty word? – National Post
- FT.com – Maligned Germany is right to cut spending
- FT.com – Debt crisis nations rely on loans from ECB
- Bruce Krasting: What’s Ben Gonna Do?
- Gastkommentar: Deutschland verschlimmert die Euro-Krise | FTD.de
The Usual Fare
- FT.com – Supreme Court finds fault in Skilling conviction
- FT Alphaville – Joseph Cotterill – Notes from the deflationary quicksand
- Builders slash prices to sell houses – Lansner on Real Estate : The Orange County Register
- BBC News – Disgraced lobbyist Abramoff takes up job in pizzeria
- FT Alphaville – Neil Hume – A €2,000bn EuroTARP needed
- BBC News – Iran claims higher enriched uranium production
- Dell’s 2011 forecast meets Street view, margins eyed| Reuters
- Blinded eyes restored to sight by stem cells – New Scientist
- Ghana 0-1 Germany | World Cup 2010 match report | Football | The Guardian
- The good news: England are through The bad news: It’s Germany up next | Football | The Guardian
- Irish Mortgage Brokers | Competitive devaluation?
- España volverá a la recesión en la segunda mitad del año, según las cajas – ABC.es
- Bill Gates doesn’t work at Microsoft anymore | ITworld
- Seven Reasons Microsoft’s Profits are Tanking – PCWorld
- macroblog: Another view of the structural versus cyclical unemployment question
Looking forward to your thoughts on why fiscal policy in the US won’t have much traction. I agree with your observation re the FIRE monster. But I think that simply means that focus on the supply side is misguided. And focus on the demand side that tries to work thru investment decisions (household or business) is also not likely to produce much. Monetary policy is mostly just keeping the markets from freezing up again.
However, I think there’s no reason why demand-side spending — whether it’s funding plumetting state spending on teachers or Medicaid or infrastructure investment — isn’t still not just effective but essential. If only in employment terms. And the amount of additional debt is piddly.
Anyway, looking foward to your thoughts.