4th October 2011
"You know, if it weren't for the politicians, the economy would have a fighting chance" writes Greg Ip of The Economist. Greg argues that austerity measures in Europe and fiscal tightening in the US may lead to an unnecessary recession in both continents.
Its 2011 so the "Great Recession" has passed right? No, thinks Joseph E. Stiglitz of Project-Syndicate. Stiglitz says the economy was "very sick" even before the crisis in 2007. He adds that in order for policymakers to find a cure for the current economic slump, they need to understand "the economy's problems before the crisis hit".
Household debt relief is being offered as one solution that could help the ailing US economy. Naked Keynesianism reports that since 2008, non-financial sector debt has fallen by $700 billion. It goes on to say that economist Irving Fischer believed "debt deflation" was at the centre of the Great Depression, the same problem facing the economy today.
Some say uncertainty will be eliminated in financial markets if Greece was allowed to default on its debt. However, Daniel Indiviglio of The Atlantic subscribes to the opposite thought that "certainty could be worse". Daniel says the disastrous fallout of the collapse of Lehman Brothers is analogous of what could happen if Greece was allowed to fail.
With an already fragile economy, a crisis in the euro zone could tip the US economy into a recession according to James C. Cooper of The Fiscal Times. This is on the back of the IMF and JP Morgan Chase slashing growth prospects in Europe. Cooper goes on to say that emerging economies will also feel the pain because of its export ties to the euro zone and America.
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