Stephen Metzger

Savings Rates and Long Term Economic Health

Excellent article. One the few I have seen that links the automatic stabilizers to DPI, thus by implication, to the income impact of unemployment. The breakdown of salaries and wages by industry is also lends insight into where we are in the economy at this point.

TALF Is Starting to Make Me Mad

Perhaps I am missing something, but Mr. Cohan appears to shift gears midstream in this article. First, he pushes the idea that we need a good recession to readjust our expectations and reset the economic software, so to speak; but then in an interesting exposition of TALF concludes that the scheme may be worth it afterall.

If, however, the economy remains fundamentally weak and pessimistic expectations prevail, the new wave of securitized issues will ultimately fail. As the government loans are no recourse loans, as Mr. Cohan points out, then taxpayers will again be called upon to bail out the government and the Fed.

I don't think you can simply talk about financial markets and the various schemes that are put together to resurrect credit markets without talking about the real side of the economy, especially the impact of potential new taxes on individuals and corporations either directly or indirectly. Ultimately, the benefits of TARP and TALF are squarely dependent on economic growth, and I don't see this as any sort of a priority in this administration.