5th December 2011
Finbar Taggit gives two reasons why cutting back on bank bonuses is a "dumb idea." The first is 50% of bonuses are paid out in income tax. Secondly, bonuses paid to bankers are usually spent on something. The economy needs people to buy things. Fintag's Newsletter
While playing around with the IMF's historical public debt database, Paul Krugman marvels at the widespread deficit panic that is driving the conservative government to cut spending even though Britain's debt to GDP ratio was much worse in 1830 and during the Great Depression. New York Times
Michael Burke on spending cuts: "This is a very damaging but much milder version of the same logic that has led Greece and Ireland to disaster – every failure to meet budgetary targets because of the impact of ‘austerity' is met by further ‘austerity' measures." Socialist Economic Bulletin
"If I understand the news coming out of Europe correctly, the new head of the European Central Bank is offering a simple deal: If fiscal policy becomes hawkish, monetary policy will be dovish." Greg Mankiw believes that this is a sensible compromise but argues that his Keynesian and Monetarist friends may disagree. Greg Mankiw Blog
Kenneth Rogoff believes talk of the recent global financial crisis marking the end of modern capitalism is based on the flawed assumption that there are viable alternatives. "The truth of the matter is that, for now at least, the only serious alternatives to today's dominant Anglo-American paradigm are other forms of capitalism." Project Syndicate
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