Sunday, October 31, 2010

Weekend update.

At The Daily Reckoning, Nathan Lewis explains gold’s rise is due to the dollar’s collapse.

On NRO, Larry Kudlow predicts low growth and rising inflation will hurt Democrats on Election Day.

CNBC reports that the European Central Bank and the Federal Reserve are pursuing different strategies:

In Fortune, Nin-Hai Tseng chides China bashers for scapegoating an important trade partner.

At Super-Economy, Tino rebuts Paul Krugman’s claim that reduced revenue, not surging spending, accounts for the deficit:

At RCM, Harvard’s Jeffrey Miron explains why Keynesian stimulus is ineffective.

The WSJ editorial page analyzes the on-going malaise.
This [poor recovery] contrasts with all other recent recoveries, which climbed out of recession much faster to reach a new peak. Nearby we update our table contrasting the recovery of the early 1980s with the current one. We cite the 1980s because that contraction was comparably deep and the jobless rate reached an even higher peak of 10.8%. Yet after five quarters of recovery in the 1980s, the economy was roaring ahead at a greater than 8% annual pace. This time the rebound reached 5% for one quarter before decelerating to today's non-cruising speed.

The neo-Keynesians who designed the 2009 stimulus reject this comparison, saying that the recent recession was uniquely awful because it was rooted in financial distress. Whatever truth there is in this financial diagnosis, it also conveniently absolves Democrats from responsibility for the damage done by their policies. Never mind the uncertainty and costs imposed by ObamaCare, onerous new federal regulations on banks and other industries, record spending and deficits and the threat of cap and tax, union card check, and the huge tax increase looming on January 1. We are supposed to believe that none of this matters because a lousy recovery was foreordained by the financial crisis.

If the midterm election polls are right, the American public isn't buying this economic determinism. They don't like 2% growth and 9.6% unemployment, and on Tuesday they'll get a chance to declare what they really think about what we would call the new abnormal.

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