Americans face threat to growth (and associated ills) and Republicans face spin-out at the polls. Greg Mankiw goes to the mat and, yeah, he's got ... 'nothing'.
It matters why one thinks the economy is moving toward severe growth slowdown. The Harvard economists seem to not want to say much about oil. Energy costs are up 17% y/y in the CPI, just this morning. Oil's tough as a topic, admittedly, but the typical lag for oil-shocks is maybe six months. That may be why so many people are so confident that the future isn't bright, even if the current numbers aren't dim. If so, they should just say so, rather than citing polls and surveys, don't you think? (I mean, why the big bucks for poll reading?)
Will recession be the crowning achievement of the Bush foreign policy fiscal wipe out? We're not in a total body cast yet, but we can already take signatures, right, before we answer that?
Of course, the sub-prime knock-on effects are easier to counter-balance, arguably.
VOODOO ECONOMISTS
Is the weak dollar the result of the 'voodoo economics' unleashed during Bush's first term? Some can't bring themselves to say. Why? It's certainly NOT the result of Fed actions.
Maybe two-thirds of the energy problem might be at the feet of those voodoo economists, too. The falling dollar makes oil cheaper worldwide, since it is priced in oil. (Is it any wonder that oil looks like it is almost behaving like a financial variable, these days?). Sure, cheap energy might boost our trading partners, but maybe not everyone looks with joy of a free-trader when assessing a negative trade-balance and a current account deficit.
FISCAL STIMULUS
So the Brookings folks produce a tomb on fiscal stimulus, calling for it to be timely, targeted, and temporary.
We need new airports. We ought to keep investing in infrastructure (of all kinds). If you can improve the capital stock at the same time you stimulate a part of the economy, construction, that is suffering from past imbalances, why not? Besides, the spring building season is right now.
Some things like 'airports' are not so timely, but big construction projects around the bend are enough to keep long-term expectations from falling, even if short-term prospects do.
As for regular-way construction, no one knows how to spend construction dollars faster than do local and state governments. (Time for a Governor to know who could use construction dollars - a nanosecond.)
And that's not terribly partisan. Governors are about evenly split on party affiliation.
Wednesday, January 16, 2008
Release the Fiscal Simulus!
