“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.
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Dean Baker: The Trade Deficit and the Weak Job Market
The basic story should be familiar to anyone who has suffered through an intro economics course. There are four basic sources of demand in the economy: consumption, investment, government spending, and net exports. “Net exports” refers to the excess of exports over imports. If we export more than we import so that net exports are positive, then they add to demand in the economy. This means that in addition to the demand we generate domestically, trade is increasing demand in the economy.
However when we have a trade deficit and we import more than we export, trade is reducing demand in the economy. A portion of the demand being generated domestically is being filled by goods and services that are produced in other countries. From the standpoint of generating demand in the U.S. economy an annual trade deficit of $500 billion has the same impact as consumers taking $500 billion out of their paychecks each year and stuffing it under their mattress.
Joseph E. Stiglitz: Will a Grexit Be the Lehman-Like Trigger of the Next Global Financial Crisis?
European Union leaders continue to play a game of brinkmanship with the Greek government. Greece has met its creditors’ demands far more than halfway. Yet Germany and Greece’s other creditors continue to demand that the country sign on to a program that has proven to be a failure, and that few economists ever thought could, would or should be implemented.
The swing in Greece’s fiscal position from a large primary deficit to a surplus was almost unprecedented, but the demand that the country achieve a primary surplus of 4.5 percent of GDP was unconscionable. Unfortunately, at the time that the “troika” — the European Commission, the European Central Bank and the International Monetary Fund — first included this irresponsible demand in the international financial program for Greece, the country’s authorities had no choice but to accede to it.
The folly of continuing to pursue this program is particularly acute now, given the 25 percent decline in GDP that Greece has endured since the beginning of the crisis. The troika badly misjudged the macroeconomic effects of the program that they imposed. According to their published forecasts, they believed that, by cutting wages and accepting other austerity measures, Greek exports would increase and the economy would quickly return to growth. They also believed that the first debt restructuring would lead to debt sustainability.
Americans have acquired a fondness for worlds of make-believe. Torture was done by “a few bad apples.” Or, we must await the “verdict of history” to judge how our invasion of Iraq turned out. Or, America is besieged by hordes of crazed Islamist terrorists scaling the walls and dedicated to surpassing the horror of 9/11. Or, The Sniper salvaged American dignity and self-respect from that tragic fiasco. Or, that it was a brilliant CIA and valiant Seals who avenged a righteous America by storming Abbottabad to assassinate an infirmed old man in his bed.
This last is one of the threads of make-believe woven into the fabricated narrative about the Congressional psycho-drama this past week over electronic spying on Americans. That engrossing campfire tale has our noble representatives struggling to find the path of Solomonic wisdom that walks a tightrope between security and liberty. We awaited in suspense to see if the perilous feat would reach its goal. We agonized at word of the NSA being forced by obedience to the Law to shut down its all-seeing networks — thereby, for a few hours, leaving America exposed to the diabolical schemes of the bearded devils. The White House warned that we are playing “Russian roulette” with the country’s very survival. No one pressed the question of all six chambers in fact being uncharged.
Steven W. Thrasher: Black children are not even safe from police violence at a pool party
Over the weekend, a video surfaced that showed police in McKinney, Texas violently controlling kids on a suburban street and pulling a gun on a young black girl. After I heard about it, it took a few hours before I could screw up the courage to watch it, because I knew it would make me cry. And it did.
The video made me cry because it showed me how black children are not allowed to play. How they’re not allowed to just be fucking kids. How their play becomes criminalized and how they’re socialized to become black adults who internalize that their very breathing selves are criminal.
The video (and the follow up interview with its videographer, Brandon Brooks) made me cry because they showed how a public space like a pool becomes the domain of a security guard with no accountability. Who calls the police. Who quickly assume guilt on every black child in sight.
It made me cry to see a gun pulled on these children. I only had a police officer begin to pull a gun on me once, but it scared the shit out of me and altered my interactions with police forever – and I was an adult. How scarred will these children be after such trauma?
Chris Weigant: SCOTUS Optimism
For political wonks, June is not the month to celebrate grads, dads, and brides, but instead the biggest SCOTUS month of the year. SCOTUS (for the un-wonky) stands for “Supreme Court Of The United States.” June marks the end of the Supreme Court’s yearly session, and it is when all the biggest decisions get handed down. [..]
Now, guessing which way the court will rule is always a risky proposition. Some even call it a fool’s game. Nevertheless, I’m going to go out on a limb today in a burst of (perhaps) foolish optimism, and predict that both decisions will actually be good news. We’ve already seen a flurry of “sky is going to fall” stories (especially over King) from liberals in the media, and my guess is that this trend is only going to increase, the closer we get to the end of the month. So I thought one article from a more optimistic perspective might be appreciated — even if my guesses turn out to be utterly wrong, in the end. That, of course, is always the risk you run when going out on a limb during SCOTUS season. Time will tell whether I’m right or wrong, but for now, here’s my take on these two cases, seen mostly through the lens of politics.
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