Indeed moderation needs to be sustained…but it better be the right kind.
Sir Stephen Cechetti wrote “We need to sustain the great moderation”, June 23, 2008 and I initially thought he meant a “from-now-on”. To my big surprise, reading it I then saw that he refers to the period 1985 to 2005 when the $500bn in home mortgages grew to $9,500bn, signifying debts of about 7 months of the current GDP, and of which $7,500bn was used for securities, as the “moderation” that with some minor tweaking, needs to be sustained.
On what planet does he live? As I see it the most important result of that boom was to make the USA even more energy dependent, in the midts of an environmental threath, and luring many babyboomers to anticipate their current consumption.
Can you imagine how much better the US would have been off if those $9,000bn had gone to infrastructure investments that prepared the US for the new realities?
But of course that could never have happened when the bank regulators all they care about is to stop the banks from defaulting… no matter where the rest of the country ends up.
Indeed moderation needs to be sustained…but it better be the right kind.
On what planet does he live? As I see it the most important result of that boom was to make the USA even more energy dependent, in the midts of an environmental threath, and luring many babyboomers to anticipate their current consumption.
Can you imagine how much better the US would have been off if those $9,000bn had gone to infrastructure investments that prepared the US for the new realities?
But of course that could never have happened when the bank regulators all they care about is to stop the banks from defaulting… no matter where the rest of the country ends up.
Indeed moderation needs to be sustained…but it better be the right kind.
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