The Great Debate

One big part of the well-financed campaign for economic austerity is the contention that the public debt is like a national credit card. If we keep charging on it, the argument goes, we’ll get overwhelmed with interest costs, suffer a reduced standard of living and, pretty soon, go bankrupt.

As David Walker, a prominent budget hawk and the former head of the billion-dollar Peter G. Peterson Foundation, has contended, “Both Republicans and Democrats in Washington have charged everything to the nation’s credit card, including tax cuts and spending increases, without paying for them.”

The Peterson Foundation is the leading sponsor of this brand of bogus economics. It is a spurious metaphor on so many levels that it’s hard to know where to begin.

Most important, this credit-card metaphor is a totally false analogy because, unlike a consumer on a spending spree who later has to pay the piper, government’s borrowing strategy directly affects economic growth. When deficit spending helps increase growth, that, in turn, makes the debt less burdensome. The Federal Reserve also has the power to buy public debt ‑ a prerogative not available to consumers.

The U.S. economy has vast productive potential that remains idle in a deep recession. When everyone who wants a job has one, and people use their purchasing power to buy goods and services, the economy is maximizing that potential.

By Don Tapscott
The opinions expressed are his own.

One thing pundits rarely do is review their own prognostications.  A year ago I published “10 big themes for 2011” – related to how the digital revolution changes business and society.  It’s helpful to review what actually occurred.  Below are my projections and some 20-20 hindsight editorializing.

1. “The crisis deepens. Rather than just an economic downturn, more people will recognize that we’re entering an era of profound change. The industrial economy and many of its institutions are reaching the end of their lifecycles — from newspapers and old models of financial services to our energy grid, transportation systems and institutions for global cooperation and problem solving.”

What happened? I think I called that one. A year ago many were saying that we had come out of the global slump and that we were in full recovery, even if it was a “jobless” one. I detest the term “jobless recovery” as an oxymoron. There is no recovery unless it’s inclusive. As the for global crisis, anyone want to debate with me that it’s getting deeper and that we need to rebuild most institutions and industries, like, say, government?

By Mohamed El-Erian
The opinions expressed are the author’s own.

It is safe to say that there is broad agreement on what is most desirable for solving the Irish crisis — namely a mix of domestic policies and external financing finely calibrated to enable the country to grow strongly, create jobs, stabilize the banks, and overcome large and mounting indebtedness.

Unfortunately, what is most desirable is not feasible given the path Europe is embarked on; and, to make things even more complicated, what appears feasible to Europe is not necessarily desirable. As a result, Ireland finds itself stuck in an unstable muddled-middle. It can’t get ahead of the crisis; it is far from a first best solution; and it confronts choices that are painful to implement and uncertain in outcome.

What is evolving in Ireland today resembles what was done in Greece six months ago. Expect the Irish government to commit to even greater budgetary austerity, its European neighbors and the IMF to provide massive funding, and the banks to receive liquidity, capital injections and other unconventional forms of support.

– Jonathan Ford is a Reuters columnist. The views expressed are his own –

So, Goldman Sachs has a “Gordon Gekko feel to it” according to an executive at Brand Asset Consulting. In a survey of leading U.S. brands, the market research firm has reached the conclusion that the investment bank’s stature has been diminished in the eyes of the public by recent events.

Somehow, this fails to do justice to the emotions the name Goldman stirs in the breast of the average American.

-Michael Keating is director of the Africa Progress Panel. The opinions expressed are his own.-

After a decade of solid progress Africa is now facing the daunting task - at a time of economic crisis - of maintaining stability, economic growth and employment, addressing food security and combating climate change. No country on the continent is escaping the impact of volatile fuel and commodity prices, the drop in global demand and trade.

The global economic crisis, however, is serving as a wake-up call for both African leaders and their international partners. The Africa Progress Panel’s 2009 report, launched Wednesday in Cape Town by panel members Kofi Annan, Graca Machel and Linah Mohohlo, argues just this.