Monday, December 12, 2011

THE BUBBLE AND THE PHOENIX: OECD Points to Mixed Slowdowns - WSJ.com

OECD Points to Mixed Slowdowns - WSJ.com

If one was to draw a parallel with the US housing bubble and suggest that too much government spending and too many policies that are anti-business exist and that the ability of governments to continue spending by borrowing in ways that will never reflect the amount of income their economies can provide to fund all of the spending the government (and many of its citizens want), then the question is how big the bubble will be allowed to grow and what happens then.

No country is really providing a stimulus to business or investment. They seem to hope that higher taxes and certainly, in the case of the US, even further expansion of government regulations and interference in the economy, will somehow be at best benign and that the miracle of economic growth will suddenly appear from the socialist world like a phoenix. However, this seems most unlikely.

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