Larry Summers, former treasury secretary, former president of Harvard and the former head of President Obama’s National Economic Council, made waves yesterday with an unequivocal and passionate call for a new round of stimulus to address what he rightly perceives as a weak recovery for American jobs and economic activity in general. In his view, the U.S. economy is hobbled by weak demand for goods and services, compounded of course, by high unemployment.
For Summers, the only viable tonic for what ails America is another round of stimulus. Absent such substantial and aggressive government spending, the United States risks a “lost decade.” In his estimation, the financial crisis was a caused by overconfidence, over-borrowing and over spending, yet the irony is that the wounds inflicted by that crisis can only be healed by renewed confidence, more borrowing, increased lending and more robust spending.
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