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Good points, MIke. I would just add that demand going forward needs to be more income-based than debt-based, and that means addressing financialization. Minsky is basic to MMT. I think that Singh is correct in his point about deleveraging, but that is not a supply side problem as he seems to think, although it is a structural problem. The structural imbalance that needs to be addressed arises from financialization, or "debt peonage" as Michael Hudson calls it. This is part and parcel of the neoliberal agenda that needs to be dismantled or the US and world are headed for a bigger crisis and impending debt-deflation.
My thought is that the deleveraging that is going on is forced, it's not by choice. Taking a 30 - 50% hit on the value of owned real estate and ending up in foreclosure is way different than liquidating debt by paying it off with cash.The long road to recovery comes because people no longer have a "Home ATM" -HELOCs & cash out REFIs are over, and the fact that real estate has not recovered, everyone’s net worth is down.Incomes have had a hard time keeping up with price increases of essentials. Looking at the chart at WSJ, "Middle Class Slams Brakes On Spending", shows that the standard of living is really taking a bite out of the lower incomes life-style. http://online.wsj.com/article/SB10001424052748703298504575534341401915382.htmlI agree more with Singh that the process will be long because the financial sector, through real estate, made fast money and that a large portion of our backbone industry has been exported offshore and the industrial competition by foreign countries significantly more aggressive and predatory than ever before.The currency race to the bottom will not work either.....all governments know they have too much to lose if their apple cart is upset any more than they already are.
Germany has seen exports decline for 2 months as the Euro eases.They played the debt to GDP game very well by using Greece as their excuse to downgrade their German Euro ( whose is it anyway ? )and getting the Euro down very well.However we know that the currency game is a big farce.Makes me wonder if all those financial engineers from Japan rigged up the comeback for the Yen to get the Japanese standard of living way up again since they can now import with ease.The rich Japanese parked their money overseas forever for the past 2 decades when the Yen crashed.
I have a message for Singh :supply side trickles were a smoke screen for the Keynesian spending of Reagan which was the real reason for the "bull market" of 25 years from 1980 to 2005.Art Lauffer needed to present a smoke screen to hide the fact that Reagan was spending more than all presidents combined preceding his terms.They called it supply side economics, but really the government spent, spent, spent.They forced Carter into cutting back and when Reagan came in and washed everything up with spending, it made Carter look inept but really it was all about how much you spent and nothing else.The Indian steel companies come here and take advantage of the poor south who are sore at the North for historical reasons, and purchase or make new steel mills.They flaunt their subsidized steel dumping into the American steel import markets in the faces of hardworking Northern based unions and workers. These actions are subsidized by what Norman has pointed out as poor southern states who take Federal dollars which are made off the backs of the prosperous North East, and then also by the steel industries in India which make the inputs ( slabs and coils ) which are dumped here with their labor and currency rigged low cost makings.Finally, it is done to undercut American enterprise.Furthermore, the Indian steel companies regularly sell to Iran, which is another subsidy of a different kind - that of off the backs of the Holocaust victims, Israel, and another laugh at US sanctions.
What structural imbalance is this Singh guy talking about? Its just more hollow cliche rhetoric. Watch Warren Mosler's interview with the editorial board from that Connecticut newspaper on his site. Mr Singh, its pretty simple: either the level of taxation is too high or too low for the given size of government. When its too high, we have unemployment, when its too low we have booming inflation. Right now its too high. Thats the problem.
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