given the trade balance and tight fiscal stance, credit driven consumer
spending in excess of income (additionally driven by rising stock
prices) has buoyed aggregate demand. absent a dramatic change in the
fiscal stance, credit crunch, falling/stagnant stock prices and/or
falling consumer confidence will dry up consumer spending, and the
economy takes a dive, with additional mass layoffs and declining
investment. that's been my take of the Godley view?
-----Original Message-----
From: Max Sawicky [mailto:[EMAIL PROTECTED]]
Sent: Tuesday, July 17, 2001 3:39 PM
To: [EMAIL PROTECTED]
Subject: [PEN-L:15239] RE: godley
. . .
Anyway, I hoped I made a bit clearer Wynne's position on this. As I
said,
international trade is not really my area. What I can stand for is that
the
present trends of main financial (im)balances of the US economy (private
sector negative net savings and negative balance of trade) cannot be
sustained. And, the longer the remedies are postponed, the more dramatic
the
implications for the US and the rest of the world. And, this seems to be
something that, again, free trade is not capable to resolve... A
What will be the leading indicators of the
implosion, and when should we look for them?
What might avert them? In short, what sequence
of events would disprove your thesis?
mbs
