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ADDITIONAL POSTS AVAILABLE AT EconoPundit.Com... September 22, 2003 More from Bear Stearns, this paper which we'll be discussing in class tonight. September 22, 2003 New from David Malpass, and the news is not good: The G7 finance ministers and central bank chiefs met in Dubai over the weekend. The communiqué was more far-reaching than expected. It stated new economic policies in several areas, calling into question the currency stability assumptions that underpin our constructive outlook. In early Monday trading, the yen and gold rose, Japanese equities and bond yields fell, the dollar fell as did U.S. and European equities, U.S. bond yields rose. We think these reactions make sense given the policy implications of the G7 communique. We will be incorporating negative revisions and cautions in several parts of our global economic outlook.
There is substantial confusion on how to interpret the G7 meeting. The U.S. presented it as a change in the G7’s direction (a harmful change, in our view), but the UK, Japan and China each offered a different spin. The UK said it was no change from previous G7 statements. Japan said it could still intervene to smooth markets. And China suggested it would not affect the yuan/dollar peg in the near-term. Since the G7 itself doesn’t make policy (and usually isn’t taken too seriously), we will want to see how national governments incorporate the G7 views before assessing the damage.
The communiqué cut new policy ground in several areas:
We’re not sure how far the U.S. wants to take this exchange rate initiative. We think countries are always influencing their exchange rates by choosing the level of interest rates and/or the size and composition of the central bank’s balance sheet. Earlier, U.S. Treasury Secretary John Snow called on China, South Korea, Thailand, Taiwan and Japan to be more flexible in their exchange rates. Many other countries are controlling their exchange rates.
September 15, 2003 Many financial markets have begun to reflect the economy's move to reflation from deflation. However, we think the economic strength of the reflation process is still being underestimated.
September 14, 2003 Here's Krugman's NYT piece on taxation and tax-fighters. UPDATE: Comment from John C. Goodman: To show that the tax rate on the average family is
not very high, John C. Goodman
September 12, 2003 From Bruce Bartlett: The gist is
that globalization, deregulation and central bank independence are the
September 9, 2003 From David Malpass: We think Japan is coming out of its deflation spiral as a result of the strong U.S. reflation and yen/dollar stability. If so, this will pull Japan out of its economic stagnation and add to U.S. and global growth prospects for 2004. The yen's value has stabilized after causing a 17-year deflation. The Nikkei has risen 40% since its April 29 bottom versus 12% for the S&P 500 index. The Journal of Commerce commodity index excluding energy is up 19% since its May 15, 2003 low. Four caveats:
We don't expect the Bank of Japan to be helpful on monetary policy, so the key variable boils down to whether Japanese businesses and the public, now awash with liquidity, believe that the deflation spiral is ending. We think the U.S. move from deflation to reflation, along with Japan's rising gold and commodity prices and its expressed intention to keep the yen from strengthening, may be enough to increase yen velocity and fulfill the increasing demand for yen. In effect, many of Japan's yen hoarders would become new suppliers of yen liquidity. We note Japan's many positives: low inventories, pent-up demand for investment and consumer goods, riches in terms of the world's largest international reserves and net international assets, high per capita income, plentiful engineers, high literacy, and technological sophistication. We think these were obscured in the 1990s by bad monetary policy, and will be sufficient to allow economic growth if the yen stabilizes at its present level. Find more here.
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June 17, 2003 DRAFT: Basic supply side argument is that reduction in this growth pattern allows the substitution of more-productive private sector economic activity for less-productive public sector economic activity. The argument can be embellished and made more complicated, but I doubt it can be improved. Can this be proved? Only be setting it in effect and seeing what happens. What's the transmission mechanism? All taxes not levied on persons directly get embedded in cost functions in one way or another. Tax reduction lowers cost curves. It works the same way oil price reductions shift AS curves down/to the right.
June 14, 2003 6:26 Via EconoPundit.com: The Thrill is Gone? I think Robert Samuelson is getting kind of tired. I think he needs a vacation. Consider his latest: Both parties are guilty. Go back to 1993. President Clinton proposed raising the top income-tax rate. Congress agreed. No Republicans supported the increase. They said that higher taxes would destroy the economic recovery. This conformed to Republican dogma: Lower taxes are glorious; higher taxes are sinister. A decade later, the predictions seem absurd. The recovery, aided by low inflation and rising employment, was already underway. Clinton's tax increase didn't have much effect one way or another. Democrats may now be falling into a similar trap. Their dogma is income distribution. The loathing of Bush's tax cuts is so widespread that it's presumed they must fail. The tax cuts go to the "wrong" people (mainly the well-off and rich), who will not spend them. Moreover, the tax cuts are so deep that long-run budget deficits must cripple the economy. Up to a point, the description fits. In 2003, 58 percent of the benefits go to taxpayers with incomes exceeding $100,000, says the Tax Policy Center of the Brookings Institution and Urban Institute. As for budget surpluses, they're nowhere in sight. Yeah, right, there's some truth on both sides, bla, yadda yadda, and so on, but can't he find even the smallest glimmer of those exciting big ideas we used to think the two sides more-or-less represented? June 12, 2003 6:11am Memri's Dr. Nimrod Raphaeli notes Saudi writers are discussing the many economic implications of Free Iraq. Here's a hint: some of this involves less than $20/bbl crude. June 12, 2003 5:22am June 11, 2003 1:17pm Form a mental picture of the two men. Now ask yourself: "Given their combined size and weight, how could she possibly have separated them?" June 11, 2003 12:24pm Keep checking the green, red, and blue lines showing each new day's 24-hr California energy situation. This is a 24/7 changing picture, updated every ten minutes (use your screen refresh). When the lines get close, current discontent noted by John Fund will be magnified exponentially: Fueling...discontent is massive fiscal incompetence...Carl DeMaio of the San Diego-based Performance Institute notes that California's general budget grew by an average of 9.4% a year from fiscal 1997 through 2002. Revenues grew dramatically too--by 27% during Mr. Davis's first term. But spending went up 36% during the same period. If the state had only held spending growth to the increase in population and inflation, it would be enjoying a $5.5 billion surplus now. I'm looking for but haven't yet found a web site with an hourly chart of this discontent. June 10, 2003 12:04pm Friedman's latest editorial may be evidence of another Krugman shrinking government bug sting. On the surface, the Friedman/Krugman position couldn't persuade anyone able to read a chart. Federal taxes as a percent of GDP trended steadily upward until the latest recession. Taking the recession and tax cut into account, the trend levels off and looks very much like a flat line at a healthy18%. An open debate on the size and role of government would ask what's the percent we're most comfortable with? Is 25% better than 18%? If so, what would we get for the added cost? The Krugman bug deceptively avoids all such cost considerations. We pay taxes in dollars, not percentages. In Inflation-adjusted dollars, federal taxes per person has relentlessly trended upward since 1952. The 1952 average federal tax burden was $2,262. In 1999 the number peaked at $6,476 -- a difference of $4,214. The debate Friedman calls for will raise two important questions. First, what has this extra $4,214 really bought the average taxpayer? Second, what (just for the sake of argument) could this average taxpayer do with an extra $4,214? Might this average taxpayer, for example, go out and buy that health insurance he can't currently afford? Update via email from
JON, a little detail that closes the discussion nicely: Tom Friedman tells the Dems how to win the White House: You win with a concept. The concept I'd argue for is "neoliberalism." ...To name something is to own it. And the Democrats, for too long, have allowed the Bush team to name its radical reduction in services, and the huge dependence it is creating on foreign capital, as an innocuous "tax cut." He calls for an open debate on the size of government. Democrats should stop being afraid to openly espouse a bigger size and role of government because [w]hen you shrink government, what you do, over time, is shrink the services provided by...governments to the vast American middle class. I would suggest that henceforth Democrats simply ask voters to substitute the word "services" for the word "taxes" every time they hear President Bush speak..[When] the president says he wants yet another round of reckless "tax cuts," which will shift huge burdens to our children, Democrats should simply refer to them as "service cuts," because that is the only way these tax cuts will be paid for — by cuts in services. Indeed, the Democrats' bumper sticker in 2004 should be: "Read my lips, no new services. Thank you, President Bush." Where is this coming from? To whom has he been talking? Has he somehow fallen into yet another "there's a plan right here in my desk drawer" trap? Every econ-neocon's dream is an open, loud, active, and principled debate on the role and size of government right before a major election. Has Krugman's misleading "shrinking government" statistic found another victim to sting? June 9, 2003 1:52pm An absolute must-read is now available from MEMRI. What's the central defect of the anti-globalization movement? You guessed it! It's the Jews! The Jews are masters at manipulating the media, money, world organizations and pressure groups. Watching the anti-globalization demonstrators rampaging through the streets of Geneva not far from the headquarters of the World Trade Organization, it is easy to identify the type of people who took it upon themselves to fight globalization. From their appearances, they look like people from the 1950's and 60's...Some of the demonstrators appeared like clowns, others were dressed in rags and odd bits of clothes while still others seemed drunk, judging from the way they behaved. Is it really necessary for the anti-globalization movement to be led by people such as these? The solution, says the editorialist translated by MEMRI, is what we can only presume would be ethnic cleansing of Jews from among the anti-globo leadership, combined with what in 1968 we called "cleaning up for Gene:" We are not going to win the battle against globalization by appearing in shabby clothes. What we need is to be able to convince others of our point of view, tell them that globalization as it exists today is unjust and will only cause more damage to developing countries. Read it all and wonder. June 9, 2003 12:42pm Fresh from the TAAMCTYT (things-are-always-more-complicated-than-you-thought) Desk. Falling dollar benefits European retailers! Maybe they'll think twice now about pushing for Euro-denominated crude oil? June 9, 2003 12:19pm O, my prophetic soul! Just like I said here, price spikes are to be expected soon. Greenspan agrees. (Fox shows an unidentified listener falling asleep during his presentation. Having myself fallen asleep during Greenspan papers at AEA meetings, I can assure you the problem is not that he's boring. Rather, his voice is soothing to a degree one can only call supernatural.) June 9, 2003 8:04am Existential horror.
You’re in front of the class explaining something you
know
is true and a few ugly common-sense neurons start firing uncontrollably,
sparking a frightening feeling this is wrong, wrong! It
makes no sense whatsoever! Dry mouth. Queasy stomach. Every word echoes as hollow, unnatural. (What moron designed the acoustics in this armpit of a classroom?) A simple numerical example! Yes! That’s just what I need! A simple numerical example! Okay here it is.
Now look. When we come out of a recession unemployed people who
were previously not looking for work start looking and, until they find
a job, remain unemployed, right? The unemployment rate is the
ratio of those actively seeking work to the sum of those employed plus
those actively seeking work (otherwise known as the labor force). This works completely counter to intuition -- take any ratio of two positive numbers with a numerical value less than one. Increase the numerator (top) and the denominator (bottom) by the same number. Your intuition, those nasty common-sense neurons, says “no change,” but the numerical value actually increases, as you can easily verify with a calculator and the following simple numerical example. Start with an unemployment rate of 25/100 or 25%. Now let ten more people start looking for work, increasing the labor force to 110 and the number actively seeking work to 35. The result is an unemployment rate of (25+10)/(100+10)=(35/110)=?. (You have to get out your calculator to verify the exact result. For now let me assure you it is a number greater than 25%!) June 8, 2003 1:31pm Will someone please explain to me why they didn't just print dollars? (I know they'd have to be transported; it seems to me that's not the point.) Inelastic Demand + Inelastic Supply + Ongoing Supply Disturbance = Price Spikes. Energy news from California may soon get interesting. I used to check this page several times a day. June 8, 2003 6:03am Donald Luskin has sent an open letter to Joseph Lelyveld. June 8, 2003 11:14am Brad DeLong evaluates Hillary Clinton's potential as a top level economic policymaker: My two cents' worth--and I think it is the two cents' worth of everybody who worked for the Clinton Administration health care reform effort of 1993-1994--is that Hillary Rodham Clinton needs to be kept very far away from the White House for the rest of her life. She had neither the grasp of policy substance, the managerial skills, nor the political smarts to do the job she was then given. And she wasn't smart enough to realize that she was in over her head and had to get out of the Health Care Czar role quickly. So when senior members of the economic team said that key senators like Daniel Patrick Moynihan would have this-and-that objection, she told them they were disloyal. When junior members of the economic team told her that the Congressional Budget Office would say such-and-such, she told them (wrongly) that her conversations with CBO head Robert Reischauer had already fixed that. When long-time senior hill staffers told her that she was making a dreadful mistake by fighting with rather than reaching out to John Breaux and Jim Cooper, she told them that they did not understand the wave of popular political support the bill would generate. And when substantive objections were raised to the plan by analysts calculating the moral hazard and adverse selection pressures it would put on the nation's health-care system...[sic] Hillary Rodham Clinton has already flopped as a senior administrative official in the executive branch--the equivalent of an Undersecretary. Perhaps she will make a good senator. But there is no reason to think that she would be anything but an abysmal president. Part of the vast right wing conspiracy? Nah. Something has been bothering me. On May 29 I posted this: Thanks to the internet you can see for yourself whether you agree with Krugman's assertion "federal taxes are already historically low as a share of G.D.P." (The chart linked to above is generated from data in this report, on which Krugman bases his argument.) You should also see whether you agree the latest round amounts to a tax cut for the rich. The line "federal taxes are already historically low as a share of G.D.P." is problematic. The links show it is sort of true, but what does it mean to say federal taxes are low "as a share of G.D.P.?" Krugman provides an answer: Once the new round of cuts takes effect, federal taxes will be lower than their average during the Eisenhower administration. How, then, can the government pay for Medicare and Medicaid — which didn't exist in the 1950's — and Social Security, which will become far more expensive as the population ages? But this is nonsense. Federal taxes are substantially higher now than during the Eisenhower administration. Expressed in constant 1996 dollars the per capita federal tax burden in 1952 was about $2,280. In 2002 the number was almost $5,900. Here's the whole picture. It shows the constant-dollar, per-person federal tax burden has for all practical purposes tripled since 1952. What are we to make of this? Is Krugman a liar? Possibly not, since I took the above extract out of context! In the original, it is clear Professor Krugman intends the meaning of the word "average" to be "average share." (Please note posts found here for more information on the dangers of taking quotations out of context.) Roughly speaking, federal taxes expressed as a percent of GDP may be going down by a few percent, as Krugman rightly points out. But is this worrisome? The answer is "yes" only if, like Professor Krugman, you imagine the federal government as a disadvantaged minority needing to maintain a "fair share" of GDP. If,
on the other hand, you think the federal government's capabilities depend on
the dollars it has available to spend on each citizen, you're
probably (and correctly) not worried in the least. The unemployment rate has risen to nine-year high. This continues as top news at the NYT. If they have succeeded in worrying you, look at a chart of the unemployment rate since, say, 1950. Is the celebrated "nine-year high" as bad as it sounds? Hint: try this. Look at the chart. Starting at 1950 and ending in or around 1983, try to discern the long-term unemployment trend for those years. Does the pattern make you comfortable or uncomfortable? Now start at 1983 and end at the present-day "nine-year high." What is the long term trend for these years. How does this pattern make you feel? Still worried? June 7, 2003 5:00am From Boise, the story of a real Runaway Train. Find the video when you have a chance. This is the best film Akira Kurosawa never made. June 6, 2003 9:46pm Harris Collingwood's take
on the "sink or swim" economy is, we should probably be
feeling more okay than not. Markets work, and information is
good. Plentiful market discipline combined with faster, cheaper,
and extremely plentiful information feels great in theory but can make
you a little queasy when you're sitting in it. (1) You can't find a job without looking for it. (2) Start looking and you cause a small increase in the labor force participation rate by increasing the labor force itself. Simultaneously you increase the number of those seeking work, which (3) increases the unemployment rate. (4) Which is one reason unemployment is a lagging indicator (i.e. unemployment can go up even though the recovery is proceeding as one might wish!). Krugman pulls a Maureen Dowd! Can this be really true? Tom Delay is quoted as willing to compromise: ''There are a
lot of other things that are more important than that,'' House Majority
Leader Tom DeLay, R-Texas, said of addressing low-income families. ''If
it is a part of a bigger bill . . . and can get us some votes over in
the Senate, then I'm more than open to it.''
As in 2001, the administration softened the profile of a tax cut mainly aimed at the wealthy by including a credit for families with children. But at the last minute, a change in wording deprived 12 million children of some or all of that tax credit. "There are a lot of things that are more important than that," declared Tom DeLay, the House majority leader. Doesn't this exclusion of the second part of the quote completely change its meaning? Am I missing something here? June 6, 2003 8:36am Once again, you heard it here first. Consider the ongoing "jobless," "falling-dollar" recovery. Dr. A predicts commentators will soon self-organize into two camps. The first, owing to its near-religious faith in market failure, will claim we're falling into the Second Great Depression. The other, under the spell of what the first camp calls "pro-market bias," will be looking for an organized decline in the dollar's value, and slowly recovering export, job, and financial markets. Who do you think best represents the first camp? I'll give you a hint. His last name starts with "K." Among early representatives of the second camp we find Pinkerton: Why is the
market going up? Stock prices are the leading indicators of future
economic activity, but they are also acutely sensitive to tax burdens -
investors and their accountants are the most likely to see the tax
angles - and the tax-rate burden has just been eased, on both dividend
income and capital gains. June 6, 2003 7:41am The child tax credit looks like it may be extended to minimum wage earners. Soon a bright reporter who can do arithmetic may "discover" income is being "transferred" from low wage earners to those just below them on the income scale. You heard it here first. June 6, 2003 7:29am "Today's "conservatives" — the people formerly known as the "radical right" — don't think of a deal as a deal; they think of it as an opportunity to pull yet another bait and switch."...Paul Krugman (who else?) He also thinks Republicans are rapists. June 5, 2003 9:10pm Something has been really bothering me about the Citizens for Tax Justice study as summarized by WAPO: While taxes are scheduled to decline for all income groups, those earning more than $28,000 but less than $337,000 will end up paying a greater share of the taxes than they did before the changes. Maybe this is all okay -- but isn't an
income "group" earning more than $28k but less than, uh, $337k
is a little too broad maybe? It seems to me they're lumping
together more than one or two distinct groups of taxpayers into one
category. I wonder what happens to this critical analysis if we
were to look at the more traditional earnings categories of $28-50k,
$50-100k, and so on? According to two "new analyses" the Bush tax cut benefits the poor as well as the rich -- but it is less of a tax cut for everyone in between! The Tax Policy Center... found that the share of federal taxes paid by the top 1 percent of taxpayers would drop to 22.8 percent of the total in 2011, from 24.3 percent today, while the share paid by the lowest 40 percent would fall to 2 percent, from 2.2 percent...All others would have a slightly larger proportion of the federal tax burden in 2011...For families earning between $22,955 and $80,903, their share of federal taxes would rise from 25.5 percent to 26.1 percent. Is it really helpful to whine about 1-2% differences in the share of federal taxes in this context? Is it ethical to report these percentages when you know (or should know) thousands of readers will confuse changes in percentage shares with absolute dollar amount. People can carry a much "larger share" of the federal tax burden while still enjoying thousands of dollars of annual tax savings. Is this article pitched to those who understand this, or those who don't? June 4, 2003 9:52am Here, courtesy of Washington Post is your economic calendar, giving you "everything you need to know about the key economic reports due out in the next two weeks." June 4, 2003 8:52am Samuelson's focus continues to be uncharacteristically fuzzy. On the one hand he argues a new prescription drug benefit will break the bank: The Congressional Budget Office projects that the costs of today's Social Security and Medicare benefits will nearly double by 2030 -- from 6.4 percent of national income (gross domestic product) to 11.1 percent...Put differently, the increase equals 25 percent of today's federal budget. It implies a massive transfer from the working-age population... But on the other hand, there's no real problem to worry about! In reality, this "crisis" is exaggerated. Although drug costs are increasing, only 5 percent of Medicare recipients in 2000 had out-of-pocket drug costs exceeding $2,000, according to CBO data. Many retirees have private insurance; and Medicaid (a government insurance program) covers some poor retirees. The whole editorial is worth reading. The apparent contradiction has to do with current versus projected costs, but the real point -- that political pandering destroys voters' ability to assess the genuine cost of public goods -- can, unfortunately, be found toward the end only by those looking carefully for it. June 4, 2003 8:31am Glen Reynolds isn't an economist, but then again nobody is perfect. This is from his latest column, which expounds on just how unlikely the internet would have seemed to the educated class of 1993: How will this be implemented? How will all of this information be digitized and made available? (Lots of examples along the line of "a thousand librarians with scanners would take fifty years to put even a part of the Library of Congress online, and who would pay for that?") Lots of questions about how people would agree on standards for wireless data transmission - "it usually takes ten years just to develop a standard, much less put it into the marketplace!" - and so on, and so on. "Who will make this stuff available for free? People want to be paid to do things!" "Why, even if we start planning now, there's no way we'll have this in ten years!" From the point of view of the lectern, the old economic chestnut "well, you have to assume perfect information" was always guaranteed to get disgruntled students' eyes rolling in indignation. Now, however, "perfect information" does not sound so unimaginable. June 3, 2003 4:27pm Here's Bob Herbert again. In Iowa, however, they love the tax cut. What to make of all this? Here's a suggestion. Using the table I provided in my May 29 posting (here's another link to it) calculate what the lowest two tax brackets would pay, net, after a child tax credit rebate was paid out on, say, a modest average of two kids. I may be missing something here, but I think the net subsidy to the lowest bracket would wind up being numerically quite close to the net tax obligation of the next-highest bracket. In other words, on the surface it would look like lowest-income taxpayers were subsidizing lower-income non-taxpayers just slightly down the income scale from them. Another viewpoint, with supporting data, is given by Robert Greenstein. June 2, 2003 12:05pm Does the internet offer wide diversity of opinion? NYT says no: "Relying on links and search engines, most people are directed to a few very successful sites; the rest remain invisible to the majority of users. The result is that there's an even greater media concentration online than in the offline world." Boy are we dumb! We thought there was lots of diversity of opinion on the internet! (Oh, by the way, the Times' side lost the decision.) June 2, 2003 10:05am Beinart explains (a) why they hate us or (b) why we're the leader of the pack. He engages in (a) moral equivalence or (b) explanation of why we're admired. And he points out how (a) the EU (and Africa) engage in modern mercantilism while (b) we over-subsidize our own agricultural sector. June 2, 2003 8:06am Bob Bartley invokes Frank Knight and Karl Marx! He gets Knight pretty much right, but his Marxism seems to need a little work. The labor theory of value determines the baseline "true" value of labor services, meaning the owner can capture anything left after raw materials and direct/indirect labor costs (wages/depreciation) are paid. As did Ricardo, to Marx saw profit as a residual (at least in Volume I of Capital). As a figure in economic history Marx is closer to Knight than Bartley seems to understand. This is why, counter to intuition, Marx's work winds up as a valuable intellectual antecedent to modern property rights theory. June 1, 2003 It seems the G-8 nations are taking Samuelson's advice. Macroeconomics professors spend lots of time explaining exactly how and why tax cuts "stimulate" the economy. Here's George Will asserting they don't. Or they may. Or they may not. He also gives a few great definitions (look for "conjecture" and economics as a "science of single instances.") Income distribution or income misdistribution? The question of the century, or so it apparently seems to some economists. Here are a few links to get you started sorting out the topic. Start with Krugman's signature essay. Continue here. Enjoy (from Daniel Drezner). Thomas Friedman explains why they (a) hate us but (b) don't organize militarily to oppose us. May 31, 2003 Is Robert Samuelson losing his focus? His latest editorial seems all over the place. On the one hand he acknowledges the dollar's fall is so-far modest and largely the result of impersonal market forces. Further, he rightly classes Euro anti-GMO-import legislation as evidence of an increasing mercantilism on the part of the EU. But other parts read as if taken from another editorial entirely. Does the cheaper dollar really raise "the unsettling specter of 'beggar thy neighbor' policies" for the fully-informed observer, or only fo r those on the lookout for cheap political ammunition? (Get a quick history of the dolllar-to-euro relationship here. Meanwhile, for those who still think capitalism is corrupt, here's how to order your very own know your war profiteers deck of cards! The tax cut is clearly part of a conservative plot to redistribute income from the rich to the poor. Or so it apparently seems to Bob Herbert and Paul Krugman. Thanks to the internet you can see for yourself whether you agree with Krugman's assertion "federal taxes are already historically low as a share of G.D.P." (The chart linked to above is generated from data in this report, on which Krugman bases his argument.) You should also see whether you agree the latest round amounts to a tax cut for the rich. May 28, 2003 Macroeconomics teaches us to distinguish between "possibilities" (there are many of those) and "likelihoods" (far fewer of these). Samuelson's editorial on the falling dollar pushes us to consider the various probabilities we should assign to some of Richard Duncan's dire predictions. The basics of business cycles are well known. Consider:
Read the rest of this excellent Robert Shapiro essay when you have a few minutes. Prices go up, prices go down. Here's Paul Krugman's latest take on the down side. As well, here's Dr. K. on unconventional monetary policy. Here's more on liquidity trap as urban legend Meanwhile Samuelson manages to clearly communicate every important point (notable exception: expectation of rapidly falling petroleum prices?) while blaming the politicians on both sides and implicitly excusing the media.
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