The “real economy”—normal people’s concern:
The financial system is obviously important to market capitalism today.
The other question that most normal people (non-economists, non financial workers) are really worried about is Jobs, Income opportunities, Growth….the Real Economy rather than the purely money/financial aspects of the banking ‘crisis’ or the debt ‘crisis’ per se. Most people have not studied these issues and most could care less about them…most find them complex and boring….they only worry that they will do them some personal harm.
Austerity or Stimulus (anti-austerity)
What is to be done about the “Real Economy” problems associated with the Euro crises (and the fallout from the US financial crisis beginning in 2008)?
The simplified troika of 3-ideological positions viewpoints among economists:
Right: Traditional Right advocated budget balancing in 1930s; today more subtle but austerity programs in Europe seem to come from this ideology about market capitalism. Not clear answer from these free market optimists; but at least a monetary policy that makes sure money supply does not contract as in 1929-33 in USA but expands as in 1933 (but how to do this is not certain in present circumstances since in 1933 government begain series of new steps involving public works, employment and spending and the Right has traditionally not advocated this).
Center: Large scale fiscal stimulus (government spending, tax cuts…..jump start the economy) and monetary easing of all kinds (innovative says Christine Romer…not sure what she means in article below); some types of employment policies perhaps.
http://www.nytimes.com/2011/12/18/business/financial-crises-impact-varies-widely-economic-view.html?ref=europeansovereigndebtcrisis
Left: Large scale fiscal stimulus (government spending increases, tax cuts…..jump start the economy) and monetary easing of all kinds, (these two policies shared with Center economists)…. and if these are not enough (as they are very probably not in the present crisis) then Left willing to spend even more from public budgets for major jobs creating programs (e.g. public works projects requiring a lot of labor, variety of possible employment subsidies to private employers to hire new workers, grants to unemployed who want to try and start businesses, subsidies for new energy saving companies, retraining subsidies for the unemployed, etc. etc. etc. nothing off the table for consideration…
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Начало формы
Moscowguy Studentki In this post I included the URL for the Christine Romer article about financial crises and how hard and long it is to exit from their effects. But she did make one error that was about the timing of Argentina to exit from its 'financial crisis of 2001...3 years not 8: see this correction http://www.cepr.net/index.php/blogs/beat-the-press/romer-on-financial-crises-getting-argentina-wrong
