Is yet another U.S. economic crisis now unavoidable?
*L.A. Times, by Alan J. Auerbach & William G. Gale, July 8, 2009:
“The U.S. confronts not one but two economic challenges: Its worst
recession since the Depression and a growing imbalance between federal
spending and revenues that makes its underlying fiscal policy
unsustainable.
To get the economy going, the Obama administration and Congress have
committed trillions of dollars to bailouts of the financial and
automobile industries and to a stimulus package of tax cuts and
government spending. These measures, on top of our current economic
weakness and the imbalance between spending and revenues, have left us
with a projected federal budget deficit of $1.7 trillion in 2009, or
12% of U.S. gross domestic product, a deficit share we have not even
approached since World War II.
Most economists accept the need to put aside concerns about fiscal
balance as we address the recession. But soon enough we will face
pressure to shift our focus from the short-term economic problem to our
longer-term fiscal problem. And, unfortunately, poor policy choices in
the past combined with the enormity of the recession make the second
problem worse and reduce the time we will have to deal with it.”
“In the immediate future, policymakers will face a delicate balancing
act between encouraging economic recovery and establishing fiscal
sustainability. Short-term stimulus can boost an otherwise weak
economy, so withdrawing stimulative policies and imposing fiscal
discipline too soon could slow the recovery. But delaying fiscal
discipline too long could be equally destructive. Success will take new
ideas, some luck and uncharacteristic honesty and resoluteness -- from
our leaders in Washington and from the rest of us.”
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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