June 16, 2010

There are many ways of tightening and easing... and some are better than other

Sir Martin Wolf rightly insists in warning on “Why plans for early fiscal tightening carry global risk” June 16, but he would further his cause focusing more on the needed quality of the fiscal spending. It is not fiscal deficits I am afraid of; it is fiscal useless waste that makes me and many really nervous.

For instance when regulators can allow the banks to lend to sovereigns with zero or minimal capital requirements why can’t they temporarily decrease the capital requirements for the banks when lending to the small businesses and entrepreneurs, those who had nothing to do with creating the mess, those who can perhaps most help us to get out of it. That to me seems a more efficient way of stimulating the economy than having bureaucrats decide on what to spend.