Some commentary on today’s economic development —
A dramatic gap has opened between the economy as Washington sees it — and wants to intervene in it — and the economy that actually exists. Whatever weak recovery we might have hoped for is being hindered by global commodity prices, consumer deleveraging, fears of flagging demand in emerging markets, earthquakes in Asia, and much more. Globally, it’s been an almost uninterrupted run of crises and bad luck. Meanwhile, Washington just spent two months arguing over whether it would pay its bills or spark an unnecessary financial crisis.
Last week, Congress resolved that question. This week, the markets are tanking. Which suggests that Washington is asking itself the wrong question.
Just remembering back now the international financial institution folks back in 2009/2010 saying it was important to rein in spending since the global economy was already coming back and the risk was inflation and indebtedness. 1937 anyone?
Paul Krugman says, in so many words — toldjah so.
Kevin Drum explains why European banks are in perilous circumstances David Leonhardt says that stock values could go lower still.