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Entries by Robert Kuttner from 07/2012

Mitigating Merkel's Mischief

| Posted 07.01.2012 | World

If Europe continues its steady march to financial depression and collapse of the Euro, no politician will be more to blame than German Chancellor Angela Merkel.

Waiting for Lefty

| Posted 07.08.2012 | Politics

President Obama is willing to have the federal government spend more money. But he has partly bought the story that deficit reduction has to come first. The Republicans would further gut the public sector. Contrary to the conventional view that deficit reduction would somehow "restore confidence" and increase business investment, that's not how economies work. Businesses invest when they see customers with open wallets. Though the Congressional Budget Office projects higher growth returning around 2014, it bases these projections on a "return to trend." There is no plausible story about where the higher growth will come from. If we don't get a drastic change in policy, we will be stuck in this rut for a generation or more.

An Eminently Bad Idea

| Posted 07.15.2012 | Politics

You may have noticed news items that a company called Mortgage Resolution Partners (MRP) is proposing to have strapped localities use the public power of eminent domain to deal with the problem of underwater mortgages.

The Fiscal Cliff and the Political Chasm

| Posted 07.22.2012 | Politics

For more than a decade, deficit hawks and their allies in the media have been promoting a grand bargain whereby Republicans agree to tax hikes and Democrats agree to cut social programs like Social Security and Medicare. That, in turn, will put the deficit on a downward path and presumably restore economic growth. The trouble with this premise is that the current deficit is mainly the result of the recession itself plus the Bush tax cuts and military spending increases. It has nothing to do with Social Security; the projected increases in Medicare spending are only the result of failure to tackle deeper health care reform.

A Tale of Two Central Bankers

| Posted 07.30.2012 | Politics

You can be confident that markets will slump again and Spanish and Italian borrowing costs will rise again as soon as investors realize that Draghi, despite his best intentions, can't quite deliver. His bank's board is due to meet Thursday, and the Germans remain adamantly opposed to allowing Draghi to get serious about bond purchases. Draghi, like Bernanke, keeps warning that central bankers can't fix the economic mess by themselves. Europe needs to reverse its austerity policies, to take shared responsibility for dealing with the legacy debt of its weaker members, and to turn the ECB into a true central bank. None of this is likely to happen.