A roundup of economic news from around the Web.
- Budget Panel Jackie Calmes writes in the New York Times that history suggests a proposed commission on the budget should be viewed with skepticism. “Washingtons shelves are full of unheeded commission reports gathering dust. Yet after more than a quarter-century, the supposed success of the 1982-83 Greenspan Commission to save Social Security continues to inspire calls for bipartisan panels. But just in time for the latest debate, the unpublished posthumous memoir of a central figure on the Greenspan panel, Robert M. Ball, a former Social Security commissioner, has emerged to challenge the conventional wisdom about its achievement. In a sprightly account promoted by former staff members from both parties, Mr. Ball calls the Greenspan Commission a failure. As he tells it, only a willingness to compromise by the two principal antagonists of the time — Ronald Reagan, the Republican president, and Representative Thomas P. ONeill, the Democratic House speaker — made it possible for Mr. Ball and a few others to salvage from the deadlocked panel a deal that raised payroll taxes and trimmed benefits enough to keep Social Security solvent.”
- Inflation Concerns: On Econbrowser, Jim Hamiltion talks about long-term inflation fears. “I think the separation between monetary and fiscal policy has become increasingly blurred. I maintain that the keys to preventing a resurgence of inflation in the U.S. are (1) credible and responsible commitment from Congress that it is not going to allow the debt-to-GDP ratio to continue to balloon over the next decade, and (2) a return of the Federal Reserve to a primary focus on controlling the money supply rather than trying to target particular yield spreads.”
- Greek Tragedy: Martin Wolf of the Financial Times looks at the complications from Greece’s struggles. “Given the horrendous difficulty of all alternatives, I am sure the effort will be made to tough it out for as long as possible. That will also be the case elsewhere. All will be forced to accept lengthy recessions. But in the absence of either strong demand elsewhere in the eurozone or a weaker exchange rate, both of which depend on decisions by the European Central Bank, the competitive disinflation route to prosperity seems highly likely to fail. Some countries may find themselves stuck in long-term stagnation. Meanwhile, the eurozone as a whole, having lost its erstwhile internal demand engines, must now hope for faster growth of net exports. So do countries hit by the financial shock, such as the U.K. and U.S.. So, too, does recession-hit Japan. So, not least, does China. Either the rest of the world has a spending binge, or these countries — which make up 70 per cent of the world economy — are going to be disappointed.”
Compiled by Phil Izzo