Great reads on the current state of our economy

When Fools Rush In: 1937 Revisited

As things stand, a second Great Depression has been averted, but growth has ranged from the weak in Europe to the unspectacular in the United States. Banks are not lending. Unemployment is running at near double-digit levels in the US and the eurozone. The determination to cut budget deficits in these circumstances does not show that policymakers of probity and integrity have replaced the irresponsible spendthrifts of 2008 and 2009. It shows that the lunatics are back in charge of the asylum.

Jamie Galbaith’s “Foreword” To Modern Money: A Commentary

Now comes Warren Mosler with a small book, setting out his reasoning on seven key issues. These relate to government deficits and debt, to the relation between public deficits and private savings, to that between savings and investment, to Social Security and to the trade deficit. Warren calls them “Seven Deadly Innocent Frauds” – taking up a phrase coined by my father as the title of his last book. Galbraith-the-elder would have been pleased.

The common thread tying these themes together is simplicity itself. It’s that modern money is a spreadsheet! It works by computer! When government spends or lends, it does so by adding numbers to private bank accounts. When it taxes, it marks those same accounts down. When it borrows, it shifts funds from a demand deposit (called a reserve account) to savings (called a securities account). And that for practical purposes is all there is. The money government spends doesn’t come from anywhere, and it doesn’t cost anything to produce. The government therefore cannot run out.

Great post on the traditional media, Clowns to the Left of Me, Jokers to the Right: On the Actual Ideology of the American Press.

What is the actual ideology of our political press? There are two camps on this question: one is huge and includes almost everyone who has declared a position. The other is tiny; it includes almost no one. I’m in the tiny camp, not completely alone but— well, there aren’t too many of us. (And if you’re one, raise a hand in the comments.)

Nouriel ROUBINI: How to Avoid a Double-Dip Global Recession.

Failure to implement such coordinated policy measures – to sustain global aggregate demand at a time when deflationary trends are still severe in advanced economies – could lead to a very dangerous and damaging double-dip recession in advanced economies. Such an outcome would cause another bout of severe systemic risk in global financial markets, trigger a series of contagious sovereign defaults, and severely damage the growth prospects of emerging-market economies that have so far experienced a more robust recovery than advanced countries.

Simon Johnson, Creating the Next Crisis.

With the Obama administration rejecting what it once supported – the breakup of megabanks that are too big to fail – we are setting ourselves up for another boom based on excessive and reckless risk-taking at the heart of the world’s financial system. This can end only one way: badly..

More FDR, less RWR, The BP disaster underscores government as the problem, not the solution.

After decades of planned neglect, mismanagement and ideological attack, the American government, across the board, has gotten out of the way of corporate America – and the country is paying a heavy price. Obama promised to make government service “cool” again. Ask him to show where he’s doing that.

Check them out.