The Economist—How to avoid a double dip

Posted by Kendall Harmon

In 2008 the world economy was saved from depression by a bold and co-ordinated plan to shore up banks and counter the slump with fiscal and monetary stimulus. Today there is no boldness (the euro-zone crisis is the epitome of politicians doing too little too late). There is no co-ordination. And, to the extent that policies have a common theme, it is the wrong one: politicians across the rich world are taking too short-term a view of fiscal austerity—a bout of budget-cutting which will only increase the risk of another recession.

It does not have to be this way. Echoing the spirit of 2008, policymakers could adopt a co-ordinated strategy to boost growth. Two priorities stand out. First, a recalibration of fiscal and (in some places) monetary policy. Second, a big push on supply-side reforms, from freeing trade to slashing red tape.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. Government* International News & CommentaryEngland / UKEurope--European Sovereign Debt Crisis of 2010

Posted August 28, 2011 at 4:26 pm [Printer Friendly] [Print w/ comments]

1. robroy wrote:

In 2008, a lot of money was spent but no corrections were made. GM makes the same crummy cars with the same bloated union contracts. Too big banks are still too big and now operate with impunity knowing that they will be bailed out again. Was this bold leadership? It was a VERY costly short term fix.

August 29, 2:47 am | [comment link]
2. Bart Hall (Kansas, USA) wrote:

The author’s comment about the Obama administration beginning to cut excess regulation merits only a deeply sarcastic laugh. Said administration promulgated over 600 new regulations in July and is on a similar pace in August.

Then, for example, as if more than 28,000 words already used to define “cabbage” are not enough, new USDA regulations in September will make it more or less impossible for me to grow and sell cabbage (or lettuce) without a federal government permit.

The present administration is moving aggressively in the wrong regulatory direction, and persistent (U6) unemployment approaching 20%  is cogent testimony to such wrong-headedness. Very few businesses will do much hiring until these folks are gone.

When big Obama supporters like GE’s Immelt are moving thousands of jobs from America to China and liberal business analysts like Flickenger are forecasting that the economy is unlikely to perform well before 13Q1 ... you know it’s bad, and you know why.

August 29, 9:56 am | [comment link]
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