Britain should not take its credit status for granted – Kenneth Rogoff – FT.com

Economic Counsellor Kenneth Rogoff

Economic Counsellor Kenneth Rogoff (Photo credit: Wikipedia)

This is an excellent, MUST READ article by Harvard economist Kenneth Rogoff. Check it out!

via Britain should not take its credit status for granted – FT.com.

I am normally a bit wary of the views of Kenneth Rogoff since the austerians in Washington, London and Berlin placed too much emphasis on his research which last year was discredited with a critical spreadsheet error.

However, Kenneth Rogoff is one of the World’s leading economists and I am seriously encouraged when he concluded (quoted directly from FT):

I am certainly not arguing that the UK or other advanced countries handled the post-crisis period perfectly. There should have been more infrastructure spending, even more aggressive monetary policy and probably more ruthless bank restructuring. But there has to be a balance between stimulus and stability.

For me, there is still an overwhelming case for policy-makers in London and Berlin to stimulate demand with top quality  infrastructure spending (I would normally argue the same for Washington but it’s meaningless with the current standoff between President Obama and the Republican Party’s Tea-Partyists).

Any thoughts?

Enhanced by Zemanta

Opinion: US Treasury starts last measures to preserve borrowing authority ex Reuters – John Gelmini

I thank Dr Alf for reblogging the Reuters article and asking the following open question:

Can you envision in the new multi-polar World order the G20 asking the US to clean house and not wash its dirty washing on the global stage?

Dr Alf’s question is interesting but the day when the scenario he envisages actually happens is not going to happen yet.

It will happen when China, Russia , India and Brazil feel that enough power has ebbed away from the West and that they are in a position to make that sort of demand.

On present trends, without the benefit of a crystal ball, this could happen within the next 10 years because if we continue to insist on carbon reduction targets and not doing anything meaningful to improve exports and growth more wealth and power will flow out of the Western nations so that America will have its soft power checkmated whilst still retaining a military edge with the most advanced weapons.

You will know when this is happening, when China becomes more assertive in its foreign policy, as the Japanese and the Philippines are beginning to discover in their disputes over islands in the South China Sea which contain oil.

Until that day, there will be skirmishing and a sort of phony war, just as there was with Ancient Rome when it reached the limits of its power and was finished off by the Barbarians.

This time round, the country that controls most of the world’s capital flows, makes most of the world’s consumer goods, controls much of Western power generation, controls water supply and has a better state education system producing the scientists and engineers, software developers of the future, is the one holding most of the high cards.

There is no inevitability about this, given faster footwork by our pedestrian and slow-moving political class, who frankly need a Bunsen burner flame applied to them to eliminate their complacency, torpor and “Divine Right of King’s ” style arrogance.

However, time is not on the side of America, and the West if the situation Dr Alf envisages is to be prevented or superseded.

 

Enhanced by Zemanta