The case for collective action Post author By Kevin O’Rourke Post date June 18, 2009 This is exactly why people were arguing for coordinated stimulus programmes earlier this year. Categories In Fiscal Policy, World Economy 4 Comments on The case for collective action ← Financial Measures (Miscellaneous Provisions) Bill 2009 → The Fed and Financial Conditions in the US 4 replies on “The case for collective action” The Chinese like everyone else want to have their cake and eat it – – complaining about the dollar risk to their $700+ billion in US Treasuries, while keeping the reminbi undervalued. How many will rush to support Finnish PM’s call for future coordination on tax rises to bring down budget deficits, to avoid tax competition? At the BRIC’s summit this week Hu said: “We should also firmly oppose protectionism, jointly safeguard the normal and orderly flow of commodities, services and personnel worldwide, and help ensure that the Doha round of global trade talks would achieve a comprehensive and balanced outcome as soon as possible.” But are uncordinated stimulus plans worse than having none? It’s impossible to detect the existence of one in Ireland – unless one includes the CIF’s proposal to tap pension funds to boost the construction industry. It could be argued that Paul Krugman argued for the bubble in housing just gone, and look where that stimulus got us, “To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble”. http://blog.mises.org/archives/010153.asp and now people want more of the same! Interesting quote from FDR’s own Treasury Secretary: “During the Great Depression, FDR’s Treasury secretary, Henry Morgenthau, noted in his diary: ‘We have tried spending money. We are spending mroe than we have ever spent before and it does not work…We have never made good on our promises…I say after eight years of this Administration we have just as much unemployment as when we started…and an enormous debt to boot!’ “(Meltdown, page 149) ‘Meltdown’ by Thomas E Woods Jr. and this was after all the stimulus of Hoover. Ciaran I can only assume your wording (it “could be argued” that Krugman argued…) bespeaks a guilty conscience because I think it’s a strained reading of his 2002 column (not to mention his subsequent commentary) to say that he was merrily advocating a bubble as a good idea. I would have thought the use of the term “bubble” was a clue that he didn’t think that the Fed’s strategy was unproblematic. Rather he appears to have been arguing that the US economy was not in a good place at that time. Similar in spirit to this in fact: http://krugman.blogs.nytimes.com/2008/07/14/state-of-the-onion/ Comments are closed.