Recovery by Deleveraging?

by Elliott Morss

Introduction

Most of the time, I think like a Keynesian. That means when the US unemployment rate is over 7%, government policy should stimulate the economy:  use the available monetary and fiscal policy tools to generate income and create jobs. But what do I really know? Not enough to ignore what others are saying.

The most respectable argument against the Keynesian solution is the need to deleverage:  the US has to reduce the excessive debt level it built up over the last 20 years before meaningful recovery can take place. According to this view, increasing the government debt level will just delay the start a real recovery.

Deleveraging

The McKinsey Global Institute did an excellent study documenting the need for deleveraging. Their primary findings:

  • Leverage levels are still very high in some sectors of several countries—and this is a global problem, not just a U.S. one.
  • Empirically, a long period of deleveraging nearly always follows a major financial crisis.
  • Deleveraging episodes are painful, lasting six to seven years on average and reducing the ratio of debt to GDP by 25 percent.  GDP typically contracts during the first several years and then recovers.
  • Today, the household sectors of several countries have a high likelihood of deleveraging. If this happens, consumption growth will likely be slower than the precrisis trend, and spending patterns will shift.  Consumer-facing businesses have already seen a shift in spending toward value-oriented goods and away from luxury goods, and this new pattern may persist while households repair their balance sheets.  Business leaders will need flexibility to respond to such shifts.

What should government policy be in such circumstances?   Kenneth Rogoff argued succinctly in a recent article:

“…the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation.”

I have problems with Rogoff’s suggestion. Read on.

A Scheme to Transfer Wealth from Creditors to Debtors

The world has changed and I might be old-fashioned. But I don’t like even the sound of this scheme.   Someone borrows money from someone else, and Rogoff wants the creditor to forgive the debt.  We hear it frequently in the press: “oh those poor people who got talked into mortgages they could not afford, credit cards with high charges, and student loans they could never repay”.

I don’t buy it. Most borrowers are literate, and when they make a foolish financial decisions, they should have to live with them. How many more pages have to be read to people applying for mortgages to insure they understand what they are doing? And students going to college: I would hope they are literate enough to read the fine print in their loan agreements.

So what is the real problem here? Many borrowers figure they can take out mortgages/loans they will not have to repay. If they really get in trouble, let them file for bankruptcy.

The US government bailed out banks that made foolish credit guarantees to one another. A very bad precedent. And, as I have noted, the US banking system is just as precarious now as it was before the bailout.

Whose Debts Are We Talking About Forgiving?

The McKinsey study referenced above presented some very interesting data on debt by sector and the likelihood of deleveraging in coming years.  These data are highlighted for selected countries in the following graph.

In the US, households and not governments are the real problem. From 2001 thru 2007, household debt grew by 10% annually. At the end of 2007, it stood at $14.4 trillion.  By the end of first quarter in 2011 it had fallen 3.5% to $13.9 trillion.

Table 1 provides data on net government debt per capita for selected countries. The US is in the middle of the pack, suggesting that severe austerity need not start immediately.

Deleveraging Via Inflation and Other Means

Rogoff points out that deleveraging can occur through inflation. But there is another vehicle for deleveraging:   GDP growth. Either one does it. I offer an example: suppose your debt is $150 billion and your GDP is $100 billion. That gives you a debt to GDP ratio of 150%.  Suppose that over the next 5 years, the debt remains the same but nominal GDP grows 5% annually, either because of inflation or real GDP growth. In 5 years, you will have deleveraged down to a debt burden of 123%. In ten years, the debt will be down to only 97% of GDP.

What To Do?

OK. Let’s accept that household deleveraging has to occur. Might not a government stimulus package (fiscal policy) and another round of quantitative easing from the Federal Reserve help out?

A stimulus package in the form of a job-creating increase in expenditures will increase GDP, and a follow-on increase in spending by those put to work will also help. It is highly unlikely
this stimulus would cause any inflation inasmuch as there is so much idle capacity in the US.

Another round of quantitative easing would probably work in just the opposite way. That is, a further Fed purchase of Treasuries is not likely to increase employment. But the further “printing of dollars” is quite likely to weaken the dollar in global markets, thereby causing inflation.

My conclusion? If deleveraging is needed, stimulatory monetary and fiscal policies should accelerate the process.

Related Articles

From Stimulus to Austerity –What Role for Taxes? by Elliott Morss

Austerity Rather than Stimulus?  Wait a Minute! by
Elliott Morss

Spending vs. Cutting Path to Growth by Menzie
Chinn

Deficits, Debt and Dysfunctional Policy-Making
by Elliott Morss

The Great Debate©:  Can Austerity Produce Recovery from the Great Recession? By Dean Baker

We Need to Change our Approach to Public Governance:  A Call for Fewer Uncoordinated Tactics, and more return-on-Coordination by Roger Erikson

Devil’s Bargain by William H. Gross

A Proposal to Reduce the US Government Deficit by Elliott Morss

<p class=”MsoNormal” style=”text-align: left;”><span
style=”font-size: 12pt; font-family: &quot;Times New Roman&quot;,&quot;serif&quot;;”>&nbsp;<span
style=”font-style: italic;”></span></span>
</p>
<p class=”MsoNormal” style=”text-align: left;”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>&nbsp; <span
style=”font-style: italic;”>by Elliott R. Morss</span><o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p></o:p></span><b><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Introduction</span></b><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Most of the
time, I think like a Keynesian. That means when the US
unemployment rate is over 7%, government policy should stimulate the
economy:
use the available monetary and fiscal policy tools to generate income
and
create jobs. But what do I really know? Not enough to ignore what
others are
saying.<span style=””></span><o:p> <br>
</o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>The most
respectable argument against the Keynesian solution is the need
to deleverage: the US has to reduce the excessive debt level it built
up over
the last 20 years before meaningful recovery can take place. According
to this
view, increasing the government debt level will just delay the start a
real
recovery.<o:p> <br>
</o:p></span></p>
<p class=”MsoNormal” style=””><b><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Deleveraging</span></b><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p> <br>
</o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>The McKinsey
Global Institute did </span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://www.mckinsey.com/mgi/reports/freepass_pdfs/debt_and_deleveraging/debt_and_deleveraging_full_report.pdf”><span
style=””>an excellent study</span></a></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”> documenting
the need for deleveraging. Their
primary findings:<o:p></o:p></span></p>
<ul type=”disc”>
<li class=”MsoNormal” style=”margin-bottom: 12pt;”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Leverage
levels are still very high in some sectors of several countries—and
this is a global problem, not just a U.S. one. <o:p></o:p></span></li>
<li class=”MsoNormal” style=”margin-bottom: 12pt;”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Empirically,
a long period of deleveraging nearly always follows a major financial
crisis. <o:p></o:p></span></li>
<li class=”MsoNormal” style=”margin-bottom: 12pt;”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Deleveraging
episodes are painful, lasting six to seven years on average and
reducing the ratio of debt to GDP by 25 percent. GDP typically
contracts during the first several years and then recovers. <o:p></o:p></span></li>
<li class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Today, the
household sectors of several countries have a high likelihood of
deleveraging. If this happens, consumption growth will likely be slower
than the precrisis trend, and spending patterns will shift.
Consumer-facing businesses have already seen a shift in spending toward
value-oriented goods and away from luxury goods, and this new pattern
may persist while households repair their balance sheets. Business
leaders will need flexibility to respond to such shifts. <o:p></o:p></span></li>
</ul>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>What should
government policy be in such circumstances? <span style=””>&nbsp;</span>Kenneth
Rogoff argued succinctly </span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://www.project-syndicate.org/commentary/rogoff83/English”><span
style=””>in a recent article</span></a></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>:<o:p></o:p></span></p>
<p class=”MsoNormal” style=””><i style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>“…the
real problem is that the global economy is badly
overleveraged, and there is no quick escape without a scheme to
transfer wealth
from creditors to debtors, either through defaults, financial
repression, or
inflation.”</span></i><i style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p></o:p></span></i></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>I have
problems with Rogoff’s suggestion. <span style=””>&nbsp;</span>Read
on. <o:p></o:p></span></p>
<p class=”MsoNormal” style=””><b style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>A
Scheme to Transfer Wealth from Creditors to Debtors<o:p></o:p></span></b></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>The
world has
changed and I might be old-fashioned. <span style=””>&nbsp;</span>But
I don’t like even the sound of this scheme.
<span style=””>&nbsp;</span>Someone borrows money from someone else,
and Rogoff wants the creditor to forgive the debt. <span style=””>&nbsp;</span>We
hear it frequently in the press: <span style=””>&nbsp;</span>“oh those
poor people who got talked into
mortgages they could not afford, credit cards with high charges, and
student
loans they could never repay”. <o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>I
don’t buy it. <span style=””>&nbsp;</span>Most borrowers are literate,
and when they
make a foolish financial decisions, they should have to live with them.
<span style=””>&nbsp;</span>How many more pages have to be read to
people
applying for mortgages to insure they understand what they are doing? <span
style=””>&nbsp;</span>And students going to college: <span style=””>&nbsp;</span>I
would hope they are literate enough to read
the fine print in their loan agreements. <o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>So
what is the real
problem here? <span style=””>&nbsp;</span>Many borrowers figure they
can take out mortgages/loans they will not have to repay. <span
style=””>&nbsp;</span>If they really get in trouble, let them file
for bankruptcy.<o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>The
US government bailed
out banks that made foolish credit guarantees to one another. <span
style=””>&nbsp;</span>A very bad precedent. <span style=””>&nbsp;</span>And
</span><span style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://www.morssglobalfinance.com/financial-reform-%e2%80%93-what-are-we-getting/”><span
style=”” lang=”PT”>as I have noted</span></a></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>,
the US banking system is just as precarious now as it was before the
bailout. <o:p></o:p></span></p>
<p class=”MsoNormal” style=””><b style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>Whose
Debts Are We Talking About Forgiving?</span></b><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”><o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>The
McKinsey study
referenced above presented some very interesting data on debt by sector
and the
likelihood of deleveraging in coming years. These data are highlighted
for
selected countries in the following graph.<o:p> <br>
</o:p></span></p>
<p class=”MsoNormal” style=”text-align: center;” align=”center”><b
style=””><span style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”
lang=”PT”>Graph 1. – Debt by
Sector, Selected Countries<o:p></o:p></span></b></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><!–[if gte vml 1]><v:shapetype
id=”_x0000_t75″ coordsize=”21600,21600″ o:spt=”75″ o:preferrelative=”t”
path=”m@4@5l@4@11@9@11@9@5xe” filled=”f” stroked=”f”>
<v:stroke joinstyle=”miter”/>
<v:formulas>
<v:f eqn=”if lineDrawn pixelLineWidth 0″/>
<v:f eqn=”sum @0 1 0″/>
<v:f eqn=”sum 0 0 @1″/>
<v:f eqn=”prod @2 1 2″/>
<v:f eqn=”prod @3 21600 pixelWidth”/>
<v:f eqn=”prod @3 21600 pixelHeight”/>
<v:f eqn=”sum @0 0 1″/>
<v:f eqn=”prod @6 1 2″/>
<v:f eqn=”prod @7 21600 pixelWidth”/>
<v:f eqn=”sum @8 21600 0″/>
<v:f eqn=”prod @7 21600 pixelHeight”/>
<v:f eqn=”sum @10 21600 0″/>
</v:formulas>
<v:path o:extrusionok=”f” gradientshapeok=”t” o:connecttype=”rect”/>
<o:lock v:ext=”edit” aspectratio=”t”/>
</v:shapetype><v:shape id=”Picture_x0020_17″ o:spid=”_x0000_i1026″ type=”#_x0000_t75″
alt=”Description: debt picture.jpg” style=’width:408.75pt;height:299.25pt;
visibility:visible;mso-wrap-style:square’>
<v:imagedata src=”file:///C:\Users\John\AppData\Local\Temp\msohtmlclip1\01\clip_image001.jpg”
o:title=”debt picture”/>
</v:shape><![endif]–><!–[if !vml]–><img
src=”../../AppData/Local/Temp/msohtmlclip1/01/clip_image001.jpg”
alt=”Description: debt picture.jpg” v:shapes=”Picture_x0020_17″
border=”0″ height=”399″ width=”545″><!–[endif]–></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”><o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>In
the US,
households and not governments are the real problem. From 2001 thru
2007,
household debt grew by 10% annually. <span style=””>&nbsp;</span>At
the end of 2007, it stood at $14.4 trillion. By the end of first
quarter in
2011 it had fallen 3.5% to $13.9 trillion. <o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>Table
1 provides
data on net government debt per capita for selected countries. The US
is in the
middle of the pack, suggesting that severe austerity need not start
immediately.<o:p></o:p></span></p>
<p class=”MsoNormal” style=”text-align: center;” align=”center”><b
style=””><span style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”
lang=”PT”>Table 1. – Net
Government Debt, 2011<o:p></o:p></span></b></p>
<p class=”MsoNormal” style=”text-align: center;” align=”center”><b
style=””><span style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”
lang=”PT”>(as percent GDP)<o:p></o:p></span></b></p>
<p class=”MsoNormal” style=”text-align: center;” align=”center”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><!–[if gte vml 1]><v:shape
id=”Picture_x0020_0″ o:spid=”_x0000_i1025″ type=”#_x0000_t75″ alt=”Description: delev2.jpg”
style=’width:468pt;height:171.75pt;visibility:visible;mso-wrap-style:square’>
<v:imagedata src=”file:///C:\Users\John\AppData\Local\Temp\msohtmlclip1\01\clip_image002.jpg”
o:title=”delev2″/>
</v:shape><![endif]–><!–[if !vml]–><img
src=”../../AppData/Local/Temp/msohtmlclip1/01/clip_image003.jpg”
alt=”Description: delev2.jpg” v:shapes=”Picture_x0020_0″ border=”0″
height=”229″ width=”624″><!–[endif]–></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”><o:p></o:p></span></p>
<p class=”MsoNormal” style=”text-align: center;” align=”center”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”>Source:
IMF, WEO Database<o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;” lang=”PT”><o:p>&nbsp;</o:p></span><b
style=””><span style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”
lang=”PT”><span style=””></span>Deleveraging Via
Inflation and Other Means</span></b><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p>&nbsp;</o:p>Rogoff
points out that deleveraging can occur through inflation. <span
style=””>&nbsp;</span>But there is another vehicle for deleveraging:
<span style=””>&nbsp;</span>GDP growth. <span style=””>&nbsp;</span>Either
one does it. <span style=””>&nbsp;</span>I offer an example: <span
style=””>&nbsp;</span>suppose your debt is $150 billion and your GDP
is $100 billion. That gives you a debt to GDP ratio of 150%. Suppose
that over
the next 5 years, the debt remains the same but nominal GDP grows 5%
annually,
either because of inflation or real GDP growth. <span style=””>&nbsp;</span>In
5 years, you will have deleveraged down to
a debt burden of 123%. <span style=””>&nbsp;</span>In ten years, the
debt will be down to only 97% of GDP.<o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p></o:p></span><b><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>What To Do?</span></b><b
style=””><span style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”
lang=”PT”><o:p></o:p></span></b></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>OK. Let’s
accept that household deleveraging has to occur. <span style=””>&nbsp;</span>Might
not a government stimulus package
(fiscal policy) and another round of quantitative easing from the
Federal
Reserve help out? <o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>A stimulus
package in the form of a job-creating increase in expenditures
will increase GDP, and a follow-on increase in spending by those put to
work
will also help. <span style=””>&nbsp;</span>It is highly unlikely
this stimulus would cause any inflation inasmuch as there is so much
idle
capacity in the US.<o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>Another round
of quantitative easing would probably work in just the
opposite way. <span style=””>&nbsp;</span>That is, a further Fed
purchase of Treasuries is not likely to increase employment. <span
style=””>&nbsp;</span>But the further “printing of dollars” is quite
likely to weaken the dollar in global markets, thereby causing
inflation.<o:p></o:p></span></p>
<p class=”MsoNormal” style=””><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”>My
conclusion? <span style=””>&nbsp;</span>If deleveraging is
needed, stimulatory monetary and fiscal policies should accelerate the
process.</span></p>
<p class=”MsoNormal” style=””><span style=”font-weight: bold;”>Related
Articles</span></p>
<p class=”MsoNormal”></p>
<p class=”MsoNormal”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://econintersect.com/wordpress/?p=8165″>From Stimulus to
Austerity –
What Role for Taxes?</a><span style=””>&nbsp; </span>by Elliott Morss</span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”> <o:p></o:p></span></p>
<p class=”MsoNormal”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://econintersect.com/b2evolution/blog2.php/2011/04/14/austerity-rather-than-stimulus-wait-a-minute”>Austerity
Rather than Stimulus?&nbsp; Wait a Minute!</a>&nbsp; by
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style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p></o:p></span></p>
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style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
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<p class=”MsoNormal”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://econintersect.com/b2evolution/blog2.php/2011/06/27/deficits-debt-and-dysfunctional-policy-making”>Deficits,
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<p class=”MsoNormal”
style=”margin: 1.4pt 0in 0.25in; line-height: 18pt;”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;; color: rgb(51, 51, 51);”><a
href=”http://econintersect.com/wordpress/?p=1912″>The Great
Debate©:&nbsp; Can
Austerity Produce Recovery from the Great Recession?</a> By Dean Baker</span></p>
<p class=”MsoNormal”
style=”margin: 1.4pt 0in 0.25in; line-height: 18pt;”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;; color: rgb(51, 51, 51);”></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://econintersect.com/b2evolution/blog2.php/2011/04/28/we-need-to-change-our-approach-to-public-governance-a-call-for-fewer-uncoordinated-tactics-and-more-return-on-coordination”>We
Need to Change our Approach to Public Governance:&nbsp; A Call for
Fewer
Uncoordinated Tactics, and more return-on-Coordination</a> by Roger
Erikson</span></p>
<p class=”MsoNormal”
style=”margin: 1.4pt 0in 0.25in; line-height: 18pt;”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://econintersect.com/b2evolution/blog2.php/2011/02/02/devil-s-bargain-1″><span
class=”internetlink”><span style=”color: blue;”>Devil’s Bargain</span></span></a><span
style=”color: rgb(51, 51, 51);”> by William H. Gross</span></span></p>
<p class=”MsoNormal”
style=”margin: 1.4pt 0in 0.25in; line-height: 18pt;”><span
class=”MsoHyperlink”><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><a
href=”http://econintersect.com/b2evolution/blog2.php/2011/02/25/a-proposal-to-reduce-the-us-government-deficit”>A
Proposal to Reduce the US Government Deficit</a></span></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;; color: rgb(51, 51, 51);”><span
style=””>&nbsp; </span>by Elliott Morss</span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”><o:p></o:p></span></p>
<p class=”MsoNormal”><br>
<span style=”font-weight: bold;”></span></p>
<p class=”MsoNormal” style=””><span style=”font-weight: bold;”></span><br>
<span style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”></span><span
style=”font-size: 12pt; font-family: &quot;Georgia&quot;,&quot;serif&quot;;”> <span
lang=”PT”><o:p></o:p></span></span></p>
<span style=”font-size: 12pt; font-family: &quot;Times New Roman&quot;,&quot;serif&quot;;”></span>
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