I am not sure I understand Doug's remarks (appended below), but probably it
is because I was not clear in the first place. Lets see:
1) There seems to be (for me and other observers) convincing evidence that
we are leading to a recession.
2) How deep and how long I do not "know", but (WITHOUT EFFECTIVE POLICY
CHANGES) we could think of something between the UK case and the CBO
projections for the US (which are indeed being 'dramatically revised' in the
last days). There were cases which were even worse than the UK, such as
Sweeden (unemployment rose from 1.5% to 8.2% between 1989 and 1993), or
Finland (unemployment rose from 3.1% to 16.4% in the same period!).
3) Other observers (perhaps Doug himself?) may have assessments of
different 'degree' (and I could walk some way along different perceptions of
this kind, simply because I do not "know"). Anyway, I was NOT referring in
my previous email to Doug or this kind of assessments in which what is
debated is the 'degree' of the implosion.
4) If you do not extract my remarks 'out of context', it may become clear
(I hope; anyway this is why I am writing this again) that in my previous
email I was referring to the position revealed to us by Goldman & Sachs. By
extension, from the feed-backs we have perceived so far, there seems to be
an interest, from the political elite, in keeping up positive expectations.
In other words, there are obvious reasons to believe that policy makers and
their advisors want to show that money easing and the tax plan (as it
stands, no more, no less) would work us well out of a recession.
5) And those reasons (implicit in point 4) are being an obstacle for
serious economic analysis. This is my guess, of course. Which could be
contradicted, of course. And actually, I was surprised of W. Dudley (G& S)'s
remarks, as quoted by Michael. You see? Perhaps I am mistaken and now
'everybody' is acknowledging that we are heading for a long period of
recession, and this is opening up a serious debate about policies to prevent
it.
BTW, I do not think the above is contradiction with what I said at URPE or
what is written in the paper.
Alex
----Original Message-----
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED]]On Behalf Of Doug Henwood
Sent: Wednesday, August 22, 2001 2:41 PM
To: [EMAIL PROTECTED]
Subject: [PEN-L:16180] Re: Monetary Policy
Alex Izurieta wrote:
>In conclusion, it all points, day by day, into a direction that confirms
the
>analysis deployed in the "Implosion ..." paper and elsewhere (e.g. Dean
>Baker had an insightful presentation during the URPE Summer school). On the
>other hand, it looks to me that there is a lot of people out there who
would
>(perhaps) agree but *will not* acknowledge the seriousness of the situation
>to avoid making matters worse precisely at the moment in which policymakers
>are trying to sell the image that their recipes are being effective...
So where are you going with this? At URPE, you seemed to hold up
Britain in the early 90s as a kind of worst case scenario. In 1991,
British GDP was off 1.5%, the only fully negative year. Politically,
the Tories were disgraced, and the left purged from the Labour Party.
Is this an implosion? Or are you expecting something worse?
Doug
