Wednesday, August 10, 2011

Practical solutions to Economic Problems

A few suggestions as to approach for UK and US in dealing with- solutions to economic crisis

Basically, there is reason to be optimistic about long term prospects of UK and US. But, in the short term, I feel that the obsession with budget cuts has led to unnecessarily weak economic recovery.

Politicians must give economic recovery the highest priority and tackle long term structural deficits through long term changes - not short run cuts.

A Note on Growth Figures

Usually after a recession, you see a bounce in economic growth, e.g. after a fall of -2.0%, the economy may recover with growth of 4-5%. This kind of growth is not inflationary as it is dealing with the spare capacity created by the recession. This gives even more reason to be concerned with anaemic growth figures of 0.2%.

Real Debt / GDP ratios - a few examples showing that the impact of rising government debt depends very much on what is happening to GDP. The Real Value of Debt

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