Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
The problem is not just one of on what the money is spent but also one of who gets the money. We need to remember that the "Great Recession" is largely the result of those who have wealth being afraid to invest and unable to practically consume more than a tiny fraction of their existing income. Increasing taxation on this tiny group and then spending those revinues for socially useful purposes would be appropriate in these circumstances.

Giving TBTFs more money, as has been done with TARP, is only useful to prevent their insolvency from becoming undeniable. Since it is their excesses and folly that has let to the GFC, it might be a good idea to let them be "resolved" instead of giving them more money.

On the other hand, money that is credited to those without wealth in return for labor provided performing socially needed tasks pays for the accomplishment of those tasks AND gets spent on consumption, which will boost the economy. It might also be sensible to enact policies that result in the return of some of the manufacturing operations that have been shipped abroad so as to re-create a more balanced economy.

As to your perception that the conversation is going sideways, it seems that what would be forward to you would be towards more "austerity". That path seems very likely to end in a death spiral of debt-deflation. If we want to get out of the liquidity trap, etc. in which we find ourselves we need a combination of fiscal and monetary policies and re-regulation that begins to reverse the massive wealth disparities that current policy has generated and that undoes some of the damage done by globalization.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Oct 9th, 2010 at 11:00:40 AM EST
[ Parent ]

Others have rated this comment as follows:


Top Diaries

Occasional Series