The headline at
The Globe and Mail reads, "US Falls Deeper Into Recession." The sole data backing up its headline is that jobless claims went up again. Newsflash: unemployment is a lagging indicator; it will continue to rise
after the recession is over. The last we heard was that the third quarter GDP shrank 0.5%, a "revision" that left the previous estimate unchanged.
But the interesting point of the article, to me, was this segment:
"Governments across the world have tried to boost expenditure to ease a recession ... with Japan and Germany becoming the two latest countries to unveil new spending programs.
"Japan's government approved an 88.5 trillion yen ($980.6 billion) budget, its biggest-ever, to cover a 12 trillion yen fiscal stimulus program and Germany pegged its second spending package at 25 billion euros ($34.97 billion).
"But some economists have said increased spending so far has failed to boost confidence among consumers, markets and investors." [My emphasis.]
Maybe instead of a surge in spending and "stimuli", what we need from our governments is a surge in responsibility.
Here is my modest 3-step proposal: (1) do government accounting just like honest businesses do accounting (e.g., include future Social Security payments as liabilities); (2) produce a taxing and spending plan that is consistent with that accounting; (3) then execute that plan.
Imagine the boost in "confidence among consumers, markets and investors" if they knew the government had a predictable and responsible plan for the 40% of the economy it controls directly and the other 60% it merely regulates.
If "confidence" is the problem, a trillion dollar bailout here, a trillion dollar guarantee there, a trillion dollar take-over here and a trillion dollar stimulus there, all without a clue as to where the money will come from, are not the kinds of things that build confidence.
The plan in a sound bite: "honest, responsible and predictable government budgeting."
Crazy, I know.
