Next message: Alejandro Valle Baeza: "[OPE-L] Wall St tumbles as bear market looms"
Previous message: Alejandro Valle Baeza: "[OPE-L] Bank of America, Wachovia Profits Plunge in Fourth Quarter on Credit Losses"
Maybe in reply to: Dave Zachariah: "[OPE-L] The state of the US economy according to The Levy Economics Institute"
The Levy Economics Institute has released another analysis by Godley et al.: The U.S. Economy: Is There a Way Out of the Woods?
<snip> It argues that a significant drop in borrowing is likely to take place in the coming quarters, with severe consequences for growth and  unemployment, unless (1) the U.S. dollar is allowed to continue its fall and thus complete the recovery in the U.S. external imbalance, and (2) fiscal policy shifts its courseÃÂÃÂas it did in the 2001 recession.
Thanks for the reference. (1) is likely and (2) is in the works.
able to maintain the role that it has had since Breton Woods are open questions, though. Similarly, it's not clear yet what the shift in fiscal policy will be (e.g. what type of tax cuts will be approved?) and whether it's a matter of too little too late (a belief that triggered the fall in the stock markets in Europe and Asia the other day).  I wouldn't underestimate, though, the ability of the US government to shift the burden of the recession to other economies: they have a lot of leverage that they can use.