Greek Prime Minister paid tribute to Greek patriots executed by Nazis during WWII. His message to the Germans was clear: we bailed you out, now it’s our turn. [Credit: The Guardian]
Shortly after his election last Sunday as Greece’s Prime Minister, Alexis Tsipras chose not lay a wreath on the Tomb of the Unknown Soldier in Athens’ Syntagma Square. Instead, he went to a war memorial in the Athens suburb of Kessariani where Nazi soldiers executed hundreds of Greek Resistance fighters during the brutal German occupation.
Tsipras’s message was not lost on Angela Merkel and other European leaders: the world forgave most of Germany’s debt; now it’s Greece’s turn. Continue reading →
Syriza party leader Alexis Tsipras hopes to prevail in today’s Greek elections, which could provoke a showdown between European leaders and Greece, which struggles under a crushing load of debt. Meanwhile, U.S. government deficits are improving. Sort of. [Credit: BBC]
On Tuesday morning, the Congressional Budget Office will announce that the federal deficit continued to decline last year.
The announcement will trigger an orgy of self-congratulation in Washington. The Administration will claim that its policies have been vindicated. Republicans also will take a bow, touting spending constraints they’ve imposed since winning the House majority.
But you’ll hear nothing from the Washingtonians who most deserve credit for reduced deficits: the Federal Reserve Board of Governors. By holding interest rates near zero and lending trillions in free money to the Treasury, the Fed has allowed the government to reduce deficits even as it gorged on debt. Continue reading →
Federal Reserve Chairman Janet Yellen plans to increase interest rates. Can government and households survive the shock? [Credit: Huffington Post]
The American economy is back. After years of tepid growth and a first quarter contraction, GDP grew by a robust 4.6 percent in the third quarter of last year. The unemployment rate remained at 5.8 percent in November, and analysts expect the Labor Department to announce tomorrow that the economy added substantially more than 200,000 jobs in December. Inflation is low, the dollar is strong, oil prices have tumbled, and federal deficits are lower. Nearly six years after the recession ended, the long-awaited recovery appears at last to have arrived.
That recovery has in part been driven by a force that could be its undoing: debt. Nearly $46 trillion of it, or more than 2-1/2 times our annual economic output. Continue reading →
Two icons of the Left — economist Thomas Piketty and Senator Elizabeth Warren (D-MA) — discussing rising inequality during an event last June. But by some measures, inequality is shrinking, not rising. [Credit: National Review]
“The game right now in America is rigged. It is rigged so that those at the top keep doing better and better, and everyone else is under increasing pressure, is under increasing economic strain…And that is the profound danger that we see from great inequality.”Elizabeth Warren (D-MA)
Democrats are still stinging from last month’s epic defeat at the polls. Some of them attribute that unhappy outcome to ideological temperance. The party would do better, some argue, if their candidates took a more strident tone, denouncing the rich, preaching that Washington governs in the service of Wall Street, and calling for more aggressive redistribution of income and wealth to dampen rising inequality.
But a new study published in the Southern Economic Journal pulls at a critical thread of that narrative. It found that, at least according to one measure of income, the gap between rich and poor actually narrowed between 1989 and 2007. Continue reading →
Economic policymakers may have us, as the Talking Heads put it in their 1985 hit, on the road to nowhere. [Credit: qednet.biz]
Former Federal Reserve Chairman Ben Bernanke has been called the man who saved the world. His extraordinary interventions in the fall of 2008 have almost universally been recognized as having prevented a second Great Depression.
But a new study by the Swiss-based Bank for International Settlements (BIS) suggests that Bernanke saved the world from a crisis that was at least partly of his own making. Worse, it argues that the course he set and that his successor Janet Yellen and other central banks are following will produce another and perhaps graver crisis.
Government monetary and fiscal policymakers have lost their way, the BIS argues. So badly that they don’t just need a new direction. They need a new compass.
President Obama believes that requiring student loans to be repaid is punishing good behavior. [Credit: NPR]
“If somebody plays by the rules, they shouldn’t be punished for it.” — President Obama
The President made this inarguable statement in the course of proclaiming a change in the law governing student loans. Henceforth, millions of people who borrowed for college will have their monthly payments restructured and, in some cases, be entirely relieved of the obligation to repay their debt.
In the President’s mind, borrowing money is playing by the rules; paying it back is punishment. Continue reading →
Harry Reid has embraced the pain of sequestration in his proposal to extend jobless benefits. But does it address the problem? [Credit: Roll Call]
“I think it’s really unfair that it would be so easy to turn the sequester around and allow us to do something for the long term to take care of this issue. But no, the Republicans like the pain. They like the pain.” — Senate Majority Leader Harry Reid, April 24, 2013
Harry Reid (D-NV) has lately embraced the pain of sequester. On Thursday, Reid advanced a proposal to offset the cost of extending “emergency” unemployment benefits with automatic cuts in medical spending for the elderly and disabled. Continue reading →