On Jan 13, 2008, at 6:00 PM, Julio Huato wrote:
> Maybe it's my eyesight, but Michael's interpretation of R&R's paper is
> not clear to me. I don't see much of the connection between R&R's
> claims and Doug's views.
Not sure what you're characterizing as "my views," but not only have I been moaning about the housing bubble for years, I've long said the current account deficit is unsustainable, and the big political economy question of our time is how the U.S. goes through some sort of structural adjustment. I wrote this in LBO last May, just to pick one example:
"Tax cuts and deregulation have been like psychotropic drugs for the American business class and the households who live on returns to capital. But the economic model has an unsustainable look about it. U.S. net foreign debt, which was virtually nonexistent in 1980, has skyrocketed. It cannot keep running huge fiscal and current account deficits forever. That’s not to say the U.S. is headed for some sort of major smashup, as many leftists (and Hayekians) argue. But it does mean a retrenchment — some sort of homegrown structural adjustment program — that the present business community and its political system seem incapable of conceiving, much less imposing. The reaction to Social Security privatization suggests that smooth political sailing is hardly guaranteed. Maybe the historical task of Hillary Clinton — former corporate lawyer, former Wal-Mart director — will be to calm the waters as the austerity program is launched."
You can replace the name "Hillary Clinton" with "Barack Obama" if you like.
Doug