Thursday, August 7, 2008

Lawrence Summers Sums Up the Economy

Lawrence Summers, in the FT, writes an intelligent, comprehensive analysis of our current economic environment:

[L]arger deficits are likely to be potent in stimulating demand...China, where household consumption has fallen below 40 per cent of GDP - a record peacetime low for any big economy - stands out in this [high rate of savings]....While there surely will come a time when things hit bottom, it is not yet clear that it is at hand.

So, we need more government spending, there's no bottom yet, and China needs to get its citizens to start spending instead of saving.

You know it's bad when conservatives start bringing up Reaganomics...whatever happened to cutting spending and trying to have a surplus or balanced budget?

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