Rolf Englund IntCom internetional
The end of the consumption boom marks the collapse of an era that began with Ronald Reagan
The world economy is entering a new phase after the failure of fiscal stimulus to create a sustained recovery in either the US or Europe.
Consumers will not provide the engine of recovery, nor should they after overspending for a decade.
The striking feature in the current debate about austerity and stimulus has been the lack of attention to investment. Consumers will not provide the engine of recovery, nor should they after overspending for a decade. Instead, the US and Europe should be using the recent corrective boost in saving rates to promote long-term investments in physical and human capital as the proper way back to sustained growth.
At a time when China is building hundreds of miles of subway lines, tens of thousands of miles of highways, a couple of dozen nuclear power plants, and a network of tens of thousands of miles of high-speed intercity rail lines, the US struggles to launch a single substantial project. China saves and invests; the US talks, consumes, borrows, and talks some more.
...Mainstream Keynesian economics is facing its last hurrah. The global fiscal stimulus championed last year by the Obama administration is coming undone, repudiated by the same Group of 20 that endorsed it last year.
Jeffrey Sachs, FT June 7 2010
The U.S. economy is spiraling downward into recession and gargantuan budget deficits.
The end of the consumption boom marks the collapse of an era that began with Ronald Reagan. Some pundits and politicians would like to return to the policies of the Clinton years, but those policies were compromises with Reaganism that will no longer suffice.
Ronald Reagan misdiagnosed the stagflation, and put the United States on a disastrous long-term course. Reagan and his colleagues argued erroneously that the problems lay in government regulation, excessive taxation, and welfare handouts rather than on the need for a redesign of monetary policy (which Paul Volcker painfully accomplished) and a sound long-term energy policy. They proceeded to dismantle much of the social safety net, building an underclass in America that is shocking by the standards of any other advanced economy in the world, for example, leaving America ranked 24th in the world in life expectancy and 25th in infant mortality.
USA:s ekonomi befinner sig i en brydsam situation
För 20 år sedan inledde Ronald Reagan en våg av skattesänkningar i västvärlden. När USA sänkte sina skatter skärptes trycket på andra att följa efter.