Friday, June 1, 2012

Catch of the Day

Seems like a good day to give one to Paul Krugman, who is left speechless by Alan Greenspan. Why? Here's what Greenspan is worrying about these days:
The former central bank leader — nicknamed "The Maestro" by his supporters — said he worries the current economy could be heading on a path similar to 1979, when the 10-year Treasury note was yielding around 9 percent before surging dramatically, gaining 4 percentage points in just a few months.
Greenspan said (video at link) that he "remembers vividly" that in 1979 no one believed that interest rates could go higher "basically because the United States is not an inflation-prone economy." And then there was more inflation and interest rates did go higher! Well then. Never mind that inflation in 1979 was a decade-long problem and the (I guess unexpected; I suppose I'll trust Greenspan on that) spike in 1979 had nothing to do with federal budget deficits. Doesn't matter: it's always 1979! The real problem here is that it's entirely unclear why a missed spike in inflation is any more damaging than any other economic policy mistake. Especially now. Given that conditions now don't look anything at all like what was going on in 1979.

Anyway, Krugman:
[J]ust look at the man who insisted that credit default swaps had made the financial system stable, that there was no housing bubble, that the housing market was poised for recovery in 2006, telling us that with interest rates at their lowest levels ever, what we need to worry about most is … the threat of rising interest rates.

And: nice catch!


  1. It's a religion, not a theory.

    It makes much more sense that way.

  2. We have a cool public radio station here in Minnesota called The Current that plays really good music, mostly new stuff but old stuff as well (feel free to check it out ). They have a thing called "theft of the dial" where they have someone like an actor or musician take over the morning show for around half and hour and play whatever they want, this morning it was actor/comedian Fred Willard. He's one of those people whose name you probably won't recognize but if you wikipedia him you will have a "oh, he's that guy" moment. He often plays the same character, like in the movie "Best in Show", a sort of affable fellow trying to be helpful who styles himself an expert but obviously knows nothing about what he's talking about. Fred was describing where this sense of humor came from and he said it was from his life, going to school and listening to principles yammer on and on and then he was drafted into the Army in the early 60's where he had to listen to officers go on and on and on about things like cleaning your fingernails and then worked in New York in offices where he had idiotic bosses who yammered on and on. He said the thing he hates most in life is when he hears the phrase "sir, can I help you." And he tries to play the person who says that to you when you are trying to walk somewhere where you're not suppose to or do something like that.

    It strikes me when we look at Serious People like Greenspan or the majority of the University of Chicago Economics Department that they are just a bunch of Fred Willards. They really don't know what they are talking about, instead they just cling to failed ideology and outdated rhetoric like the survivor of a shipwreck clinging to wreckage in the face of disaster. They act just like Fred would, just instead of yammering on and on about golfing while being the TV host of the dog show in "Best in Show" they are engaging in behavior that is destroying the world economy.

    Nero at least fiddled while Rome burned, Greenspan can't even be entertaining.

  3. What's really amazing is that this post of Krugman's is only the third most alarming of the three he's posted (so far) today. And he hasn't even got to the jobs report yet. :-/

  4. Simply amazing that people still give Greenspan any credit at all. Of course, the story was on CNBC so what else should one expect.

  5. Doesn't "it's always 1979" encompass everything about modern Republicans? Can we make that their new tagline, at the very least for economic and foreign policy issues?

    1. Actually, I've spent a fair part of the afternoon trying to get #always1979 going. This could be because I'm sort of stumped for stuff to write about, but regardless...I'll take any help I can get.

    2. I just saw that on Twitter. Not that I can really help, but I'll use it.

  6. "Given that conditions now don't look anything at all like what was going on in 1979."

    True. Debt/GDP was only at 33% in 1979. Lucky for us that debt/GDP is irrelevant because our bonds are selling well right now and that markets never turn on a dime.

    1. backyard, granted that you're being ironic, you've mistaken relevance for priority. Nobody disputes that debt and inflation are relevant -- the question is why they should have priority over unemployment and low growth, which are actual, real and already here. The point of economic policy should be to limit people's suffering, so maybe we should start with the problem that's actually causing the suffering. Inflation is not that problem, and until the markets doturn, neither is debt.

    2. Jeff

      I don't believe that there's a trade off between inflation and unemployment (stagflation happened, etc.) which is why our opinions differ. Stimulus spending is just another way to argue for growth of the federal government.

    3. which is why the stimulus package was marked by a huge upswing in public employment, right? instead of the hemorrhaging of public sector jobs consistently dragging down monthly jobs numbers..

      wait, what?

    4. Anonymous 7:56,

      As Dean Baker has pointed out, the feds could tell everyone with a lawn to turn the sprinklers on, send them checks, and call them employed. And this is not an unusual definition. They don't have to produce anything to be gov employees.

      This is how communist countries could have full employment. And why those countries only produced poverty.

  7. In case anyone's interested, here's a lengthy position paper from the Richmond Fed about why inflation scares are dangerous. The whole thing is pretty tedious, but here's a key paragraph from page 2:

    Inflation scares are costly because resisting them requires the Fed to raise real short rates with potentially depressing effects on business conditions. Hesitating to react is also costly, however, because by revealing its indifference to higher expected inflation the Fed actually encourages workers and firms to ask for wage and price increases to protect themselves from higher expected costs. The Fed is then inclined to accommodate the higher inflation with faster money growth.

    If you read on - I mean, to the next paragraph - you'll note that the Fed has managed inflation since 1979 by aggressively tightening in the face of scares. A problematic approach for today, considering that Bernanke has taken the unusual step of forestalling any tightening until 2014.

    As the Richmond Fed paper also explains, the 1979 spike in long rates was a result of an inflation scare; Mr. Greenspan is (understandably) forecasting something similar in the face of unprecedented and endlessly spiraling debt.

    With that as backdrop, Krugman dismisses Greenspan because current rates are low? Really, liberals? What do current rates have to do with anything? That's like dismissing a forecast that tomorrow there will be rain, cause, duh, anyone can look outside and see its sunny.

    Seriously, guys, I mean this in the friendliest way possible, but your Krugman fetish...maybe you need another hero.

    1. Just to clarify the point about the low rates: as the Richmond Fed paper notes, inflation scares fuel inflation due to reactions to the perception that inflation is imminent. The Fed has historically forestalled such a deadly spiral by being quick to tighten.

      In the current environment, Bernanke has taken the unprecedented step of forestalling any tightening for another 8 (?) quarters. Bernanke is thus, definitionally, playing chicken with a devastating inflation spiral arising from an inflation scare - and the ballooning debt is not his friend in that quest.

      I suppose in fairness to Krugman he might have been inferring that with low rates, the Fed has theoretical room to tighten. Even if that's what Krugman intended, it still probably misses Greenspan's point (and certainly looks past the lessons of the inflation scare era).

    2. "Inflation scares are costly because resisting them requires the Fed to raise real short rates with potentially depressing effects on business conditions."

      That's what Krugman says as well.

      ". . . actually encourages workers and firms to ask for wage and price increases . . ."

      That's what Krugman calls for as part of the solution.

    3. Conservatism is a CultJune 3, 2012 at 10:33 AM

      What a bunch of NONSENSE!

      "...the 1979 spike in long rates was a result of an inflation scare..."

      The price of oil went up 150% in 18 months.

      Spot Oil Price: West Texas Intermediate

      1979-01-01 14.850
      1979-02-01 15.850
      1979-03-01 15.850
      1979-04-01 15.850
      1979-05-01 18.100
      1979-06-01 19.100
      1979-07-01 21.750
      1979-08-01 26.500
      1979-09-01 28.500
      1979-10-01 29.000
      1979-11-01 31.000
      1979-12-01 32.500
      1980-01-01 32.500
      1980-02-01 37.000
      1980-03-01 38.000
      1980-04-01 39.500
      1980-05-01 39.500
      1980-06-01 39.500
      1980-07-01 39.500

      So, if that's just an "inflation scare", then what does real inflation look like?

  8. One other thing that strikes me about Krugman: he somewhat illustrates how far the "cottage industry" transformation of otherwise-neutral media has gone. Krugman is no longer a commenter, he's a brand; sort of a lefty Limbaugh, and while business is not as good as on the right, its not bad if you can get it.

    As an illustration, suppose the American Political Science Association is planning their annual conference and looking for a keynote speaker. They land on Krugman and write him a check for $50 K for a one-hour talk. What will Krugman say?

    Well, he could get up there and talk about how US Debt as a share of total global financial capital is alarmingly high, kept afloat by the fact that other potential targets for capital suck worse, but at a deficit run rate of $1.5 T/year, our debt is increasing that share of total global capital at an incredibly alarming rate, and since it will take a while to undo our deficit trends, given dysfunctional DC, we better be pretty nervous. Krugman certainly is a smart enough guy to know all of that is true.

    However, Krugman is also a smart enough guy to know that, if he says all that, the assembled liberal political scientists will be deeply disappointed with his talk, and the resulting word-of-mouth will be quite bad; in particular, bad for his ability to get future $50 K speaking gigs.

    Instead he will mock Greenspan in that talk, the audience will eat it up, and he will make a bunch more money.

    Given the for-profitization of everything in the media, how can you trust anyone anymore?

    1. What he would say is that austerity during a slump will drive the economy further down. In addition to worsening the lives of real people, it would also reduce federal revenues and increase spending on unemployment insurance, countering much or all of the deficit-reducing effect that the austerity was hoped to have. He would then point to Europe as an example of his point. He would then repeat that you must revive the economy first and attack the debt and deficit second.

  9. Scott, thanks for the comments. One of the interesting aspects of Krugman the Lefty Limbaugh is that he tends to make arguments against austerity at a very hypothetical level, while assiduously avoiding specifics. I'll take a cut.

    The current US debt is $16 T. I don't have a cite, but I have in mind that the total global financial capital is around $125 T. Not all that $16 T is US paper; for simplicity let's assume it is. That means US debt accounts for about 13% of global financial capital. I also don't know what that ratio would have been say, 30 years ago, but given that US debt/GDP has grown more than threefold, surely that change overwhelms the growth in total global GDP - so the 13% today must be at least twice as high as the percent 30 years ago.

    And as liberals constantly remind us, we get away with that. In part because the rest of the world really stinks, in part because America Fuck Yeah. Krugman the Generalist says there's no worry in jacking that percentage up further...but how far? He doesn't say.

    What he does say, when he's playing Krugman the Fear Monger, is that this is really a depression. Based on the last depression, we're 3 years in with 7 to go. If you further assume it takes a couple years to unwind the structures supported by huge deficits, maybe we stay on our current deficit glidepath another decade if we do the Full Krugman. Not a totally unreasonable assumption, yes?

    If we look at the four years of ginormous deficits in the Great Recession, and we take 2009 ex-TARP (which is, in fairness, a one-timer), we are on a glidepath from $1.0 T deficits (Yr 1) to $1.5 T deficits (Yr 4 - 2012). How much more debt might we add in the next decade if we do the full Krugman? At the current glidepath, a 10-year average of $2.0 T annually is not unreasonable, no? So today's $16 T national debt would be $36 T in 2022.

    Further, let's assume that global financial capital grows by, say, 2% annually, such that today's $125 T is $150 T in 2022. In summary, today our treasury paper accounts for about 13% of total global capital, fleshing out Krugman's cannon seems to suggest that number could go to 25% in a decade with no decline in demand (even though today's 13% feels artificially high due to reduced demand for competing investments).

    Could we make it to 25% without a drop in demand, leading to a spike in rates, the whirring of the printing presses, and runaway inflation? Its possible, but given that the current 13% is propped up by artificial forces (i.e. weaknesses of other investments), it beggars belief that we could safely get to 25%. In fact, I'm pretty comfortable betting that Krugman himself doesn't think the US debt can double its share of global capital without triggering a massive drop in demand, with all the inflationary consequences that follow.

    And yet, when he's giving that speech at the APSA, looking out at an audience that is largely nervous about how austerity might affect them personally, US debt share of global capital is probably the last thing on his mind. Its wrong to stop borrowing money! Smiles. Applause. Paycheck. Where are we tomorrow night again?

    1. I like the part where all the professional academics are narrow-minded ideologoues uninterested in facts and cogent argumentation.

    2. Matt, I take your point, I was trying to be too clever by half and it came out snarky and adhominem against the polisci profession.

      Nevertheless, does Krugman cover off against the issues raised in the rest of that post? I'm not saying my percentages are exactly correct; however, the following generalizations must be true: 1) US debt as % of total global capital is way higher than 30 years ago; 2) Appetite for that debt is helped by unusual, exogenous factors (i.e. trouble in Europe); 3) If we go the 'Full Krugman' - and things are as bad as Krugman says - its hard to see how the debt doesn't more than double over the next 10 years, with the demand of US debt on global capital, already strained, also more than doubling.

      Does Krugman answer these criticisms? Does he have an explanation why his uber-Keynesian fetish still works in these unique, unusual circumstances? Or does he just sneer at his doubters and make fun of them?

      To be clear, I don't know for sure that any of this will come to pass. No one does. However, unless you're totally in the Krugmanian ideological bag, its pretty obvious that the scenario he endorses realistically leads to problematic demand on global consumption of US debt, more likely than not, over the next decade. As such, the burden of proof is on him to explain why we can follow his advice in the face of unusual headwinds.

      Does he rise to that burden? It strikes me he does not, though in fairness I do not read everything he writes.

    3. Conservatism is a CultJune 3, 2012 at 7:02 AM

      So, if Krugman is the Limbaugh of the Left, does that mean that Limbaugh of the Right?
      That would explain A LOT about the absurd economic beliefs of conservatives.

    4. CSH, earlier I merely repeated things that Krugman has said on numerous occasions. Naturally, I'm reluctant to go beyond that to what he "really thinks" on other issues. All I can say is that he believes austerity in times of weak demand will make the situation worse, not better. Austerity has had this impact in Europe. The debt should be addressed but cannot be until the current problems are dealt with. (And, after all, Keynesianism was invented for these unusual circumstances.) He may well believe that, if done correctly, the deficits wouldn't have to be continued for ten years. After all, if I recall, he said back in 2009 that the stimulus was inadequate (relative to the collapse in demand) and that too much of it was devoted to tax cuts and that, consequently, the impact would peter out by the second half of 2010, which it did. His preference, I presume, is for a stimulus that restarts growth rather than one that pushes a slumping economy ahead for one more year. Apparently, he believes that is possible.

      I understand the current debt burden is comparable to what we had following World War II, not usually considered a position to be emulated, but not unprecedented either. Basically, we never paid that off. A combination of economic growth and inflation simply made it a more manageable percentage of GDP over time. That may not be an ideal policy, either. (To be sure, Italy's current debt problems are not the result of recent deficits but of large debts accumulated 20-30 years ago and never paid off.) Still, it suggests that less catastrophic outcomes are possible.

      Maybe JB can send Krugman a note and see if he'll respond in person.

    5. Speaking of Europe, I understand that the only reason the eurozone is not in recession right now is that the large German economy has a positive growth rate of about 0.5 percent. It has that growth rate because its export sector has been doing well. Its export sector is doing well because the euro exchange rate is so low. The euro is low because of the Greek crisis. So--in a perverse sort of sense--I guess you could say that Europe has been saved from recession by the Greek crisis, at least for now. I'm not sure that's a solution that I'd recommend either.

    6. Conservatism is a CultJune 3, 2012 at 10:53 AM

      " came out snarky and adhominem..."

      Nothing wrong with being snarky if you know what you're talking about, but you are totally clueless, CSH.

      "...Krugman the Lefty Limbaugh is that he tends to make arguments against austerity at a very hypothetical level..."

      This is just pure bull. Go read Krugman's NYT blog.

    7. C is a C --

      The spam thing in blogger seems not to like you, and it ate some of your comments; I think I restored them all.

      That said...that was just an automated thing that's happened to lots of commenters (including IIRC CSH), but please keep your language on the civil side of the line, which you've been at best straddling. There are lots of places where it's not true, but around here I think you'll find that most commenters on both sides are looking for real discussion.

    8. Again, wish I had time to engage in these terrific threads...

      As a not-economist, the main thing that I would say is that in my view, one can differentiate between very low but positive inflation (where we are now), which many but not all economists feel is actually lower than optimal; low-to-moderate inflation that the "target nominal GDP" people want, which is higher than we are at now; clearly too-high inflation in the late 1970s range which everyone thinks is a bad thing; and runaway inflation or hyperinflation, which everyone agrees is horrible.

      The inflation hawks seem to believe that there are no intermediate steps at all; that once we move from where we are to anything higher, we're on the road to hyperinflation with no off exits. I think that's nonsense. If we cured late-1970s inflation, surely we can cure a recurrence. And, yes, I do believe that if deficits become a right-now problem instead of a theoretical-maybe-future problem that they can be cured pretty quickly; that was the story of 1982 and the Bush-Clinton deficit reduction packages.

  10. Thanks for the comments. A few thoughts:

    One reflection I had last night was that our current troubles are due, at least in part, to us not acting like Keynesians when times are good. Keynes argued for stimulative spending in times of need and delevering in times of plenty (this view, by the way, is fairly obviously appropriate and not new to Keynes; basically, this is the architecture of Joseph's reaction to Pharaoh's dream at the end of the Book of Genesis).

    The last 30 years have not been Keynesian in that the times of plenty have featured additional leverage (ex the Tech Bubble), instead of the prescribed deleveraging. Would Keynes still be a Keynesian in such circumstances? As we are witnessing, levering up during times of plenty (as well as during times of need) endlessly rachets up the stress on public coffers - that's the issue with the struggling developed world today; rational conservatives are not opposed to stimulus per se, but rather worried that stimulus at Debt=1.2XGDP is much more dangerous than stimulus at the Debt=0.3XGDP of a generation ago. Not a Keynesian scholar, but I'm fairly confident that John Maynard would have agreed.

    As for the incrementalism issue, ultimately that's a threshold does seem to me that getting a handle on spiraling inflation is much harder when you've ratcheted up extant debt then when you haven't. Suppose the world's 'normal' appetite for US debt is 12% of total global financial capital. Suppose further the US wants to drive that number, to, say 13% to meet temporary (Keynesian) financing needs. We'd all agree that the Fed has many strings it can pull to make up such a difference.

    Now suppose that the percent of total global financial capital represented by US debt has been driven up to 25% because of temporary favorable circumstances (to the US) occurring elsewhere. Let's say that the global demand returns to its 'normal' level of 12%. Would the Fed be able to pull enough levers to close that gap?

    Or would that deafening whirring noise you would hear be the sound of millions of printing presses working at full capacity 24/7/365?

    Oh, and one other: its true that Congress and administrations, of various stripes, have put aside partisan mud-slinging to solve burgeoning debt crises in the past.

    When its this Congress + this Administration v. exploding debt, isn't that like the rivalry between the fly and the speeding windshield? Who has the Congress+Administration in that battle? (What sort of odds did they have to give you?)

    Finally, to Scott Monje: if there is economic growth on the backside of this debt bomb (similar to what came from the industrialization effort in WWII), I'd be with you that the dangers we face are less than I have described. However, you'd have to give me about the same odds to place money on such transformational industrialization being just around the corner as you would on this Congress+this Administration rapidly fixing a debt crisis.

  11. I understand the Keynesian idea of boosting growth by stimulating the "animal spirits" of the economy. But as CSH points out, that's how you get a tech bubble and a housing bubble. Sustainable growth can't be based on artificially low interest rates and interminable deficit spending, but only on investment based on real savings. Pulling back these tools of stimulus would mean a sharp recession, but that's just how the economy reallocates resources to more productive uses.

    This is the teaching of the Austrian school of economics, which is only embraced on the right these days. That's unfortunate, because it isn't necessarily inconsistent with mainstream liberalism (Hayek, the father of the Austrian School, supported a safety net based on social welfare). Progressives don't really want to give Wall Street license to run wild, but with Keynesian stimulus as their only response to every contingency, they just keep feeding the corporatist beast that threatens to destroy us.

  12. Pulling back these tools of stimulus would mean a sharp recession

    imho, there are two types of economic slowdowns: the "insufficient demand" type and the "excess supply" type. The former is usually relatively easily solved by Keynesian stimulus; the latter is often longer, nastier and usually requires not stimulus but rather an unraveling (deleveraging) of excess capital in the economy.

    Its not nice to say it, but the "excess supply"-type recession is ultimately solved by getting rid of the, well, excess supply. Often, this is accomplished by war, which tends to destroy a massive amount of human and physical capital. Indeed, the two most famous "excess supply" recession/depressions of the past 200 years are the Great Depression (driven by excess financial speculation) and the Panic of 1857, (driven by overexpansion of the US economy). Ultimately, both 'supply-side' depressions came to an end at a staggering cost of human and physical capital in terrible wars.

    War may not be the only answer to 'excess supply' type Recessions, but it unfortunately seems to be the most effective. Japan entered one 25 years ago when they were investing human and physical capital against Nikkei 40,000; a quarter-century of endless government machination later the Nikkei is 80% lower and there's still no end in sight.

    So...are we in an 'insufficient demand' or 'excess supply' type recession/depression? I respect that the answer isn't clear, but my $0.02 is 'excess supply'. In this case, the 'excess supply' is the bitter fruit of 50 years of MNC efficiency, which has resulted in too many humans needing employment for the amount of employment required by an MNC-dominated economy. That - in my unprofessional opinion - is the core, unsolvable-by-central-government-manipulation, problem that is haunting the developed world.

    I might be wrong. I know that Jeff has explicitly disagreed, arguing that this is an insufficient demand recession; Jeff's an awfully smart guy and so he could very well be right (and me wrong).

    However, if I am right, it might give liberals pause about how "kind" it is to warn against austerity because it is painful. As Couves said, and I blockquoted, amen brothers. There can't be any disagreement that austerity will hurt, probably very badly in most cases.

    But consider the pain you're warning against. Its like this: suppose someone you love receives a frightening diagnosis of a mid-stage cancer that has a particularly brutal treatment regimen, such as perhaps esophogeal cancer. As your loved one is considering their options, you can attempt to warn them off chemo and radiation, triaging them instead into hospice, on the basis that "this is really going to hurt". You're right that the treatment will hurt. But you're reco is nevertheless not really helpful.

    If this really is a supply-driven recession/depression, warning against austerity because "its painful" is like warning the esophogeal cancer patient to eschew treatment cause its gonna hurt.

    1. I just reread that and realized it kind of reads as if I'm advocating for mass warfare. I certainly hope it doesn't come to that (if I'm even right), and I don't advocate the killing of people.

      Unless, of course, by "people" you're thinking of "corporations as people", in which case, yeah, maybe we could do in a few of those MNC-type corporate "people".

    2. CSH - Yes, there’s an excess of certain kinds of capital (ie, capital is misallocated). Major war, as a kind of liquidation, can allow the allocation of capital to reset when it ends, but the destruction of lives and resources obviously make it a ‘cure’ far worse than the disease.

      Insufficient demand is "the problem" to the extent that credit-based consumer spending has slowed and we still have an economy based on meeting that unsustainable demand. The sooner we end ALL stimulus and accept that the previous false economy isn’t returning, the sooner capital can begin looking for uses that are more modest in terms of next-quarter profits, but ultimately more productive for us collectively.

    3. At this point, I'd also like to cite the rapping Hayek (Keynes argues for the economic benefits of WWII):

    4. Ok, here's a better description of Hayek's theory (3-parts, with less rapping):

  13. CSH, I didn't advocate not paying the debt, I merely said it's happened before (and threw in a caution about Italy). You continue to focus on hypothetical problems, which may represent real risks, but ignore the existing problem. So, tell us what you think should be done.

    1. Scott, somwhat similar to what Couves was arguing, my bias is to dial back government intervention(-ish), let the chips fall where they may, and "restart" in a less-levered place. This will be painful. Circumstances may end up taking us there anyway (i.e. brutal war), so it might be better if we handle this unpleasant task proactively. To the extent that government participates in this process, I would prefer that it acts against the interests of the 'corporatist beast', to improve our odds of a better restart.

      A big part of our disagreement probably stems from which side of, our even how, we're looking at the elephant. I've mentioned late 80's Japan and its 40,000 Nikkei, which a backward-looking Rule of 72 might say was only worth about 750. Suppose the economy were mostly comprised of the big screen tv industry, and it happened that all big screen tvs cost $40 K, while consumers were only willing to spend $750. You'd have a slowdown!

      You could argue that the government should borrow ~$39 K/citizen, together with strongly worded notes that we take our borrowed money to buy the $40,000 tv. You could rationally base your reasoning on all the people who depend on the turn of the $40 K tv - the suppliers, the subassembly workers, the retailers, etc. etc. etc. So much pain would accrue if we let the big screen tv market revert to its pareto optimal level that we MUST put $39 K in consumers' pockets to keep the thing afloat.

      Your argument would be absolutely correct within its assumptions. Looked at another way, it would be terribly misguided. IMHO, that vignette more or less captures the choices we're facing.

    2. I've often suspected that some people think a deep downturn (depression?) is inevitable and that we may as well get it over with. They're understandably reluctant to come out with it openly. I certainly hope they're not right.

    3. If the lingering global downturn really is a "supply-side" slowdown, it is far preferable to handle it via legislative austerity than at the point of a spear.

      In that respect, events like the election in Greece this month might have a huge impact on the future well-being of the world. If the Greeks choose to bite the bullet at the ballot box (as opposed to taking the bullet on the killing field), this may hearken a new era of rationality, of human cooperation, a Golden Dawn (but probably not the Golden Dawn).

      Heck, I might even become a liberal!


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