Forecasting for the Post-Election Economy and a Post-Bernanke Federal Reserve
Just a quick note here – I was on Capital Account last night talking about what I expect to happen politically next year. I spelled out some of it in my last post on the US election and the Fiscal Cliff. But here is a more complete view that includes not just the fiscal cliff but some thoughts on the Fed and on Europe as well.
They seem to have a good taste in the selection of the guest on this important day. I am glad president Obama successfully defended his mandate even though I have not had hardly any doubt and worries. That one was pretty clear since I first saw the Republican line-up over a year ago nor did I fall for the economy as the ultimate determinant of the election failure/success causality.
But what made me really happy was the success of Elizabeth Warren. That is a very capable and driven woman.
Maybe she can bring the excesses in the banking sector to heel. I would love to see her on the Senate Banking Committee
I don’t have sufficiently deep insight to guess the likelihood of that happening. But if the key issue is reigning in the excesses of the financial sector – I hate sounding sceptical on this very day but I don’t think any substantive, “hard-hitting” measures (like splitting the “too big to fail institutions” or separating investment and retail banking) will be taken until there is another major event or another leg in this economic depression manifesting itself almost by a Lehman-like event.
I agree with your comments on the show apart from lower taxes is stimulative. This ignores the fact that as the rich will save their money rather than spend it, it will not stimulate the economy at all. If the government spending to finance these tax cuts comes from welfare spending then the overall multiplier effects of government spending plummet and the economy will stagnate.
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