Monday, September 26, 2011

Some Links on the Recession and Response

Expectations matter. Maybe the letters saying further action would be bad for the economy were self-fulfilling because of the impact of the announcement on expectations. On paper, Ben did the right thing. What's going on in investors' brains the last week or so is another matter.
Taxing the rich. Even if it doesn't raise substantially more income, and may have unintended consequences, redistributing from savers to spenders is probably helpful in the short run (and design matters).
Are pensions Ponzis? They need not be, but they do have Ponzi-like attributes, and it is tempting for managers to raid them (including - especially? - when they're run by "public servants").
Much ado has been made of recent upward revisions to Ireland's growth for last quarter, because they implemented austerity instead of stimulus. Problem: They're much farther behind their 2007 peak than the other developed countries that got hit.
The spending side: Biggest contributor to our deficit increase in the last 10 years; the biggest revenue contributor: the recession itself, followed by the 2001 & 2003 tax cuts.

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