Via Atrios and Krugman, Third Wayer William Galston claims to have discovered, appropriately in The New Republic, "a new theory" of our economic troubles - it is the household balance sheet due to the homeowners crisis:
Movement conservatives argue that the weight of a government that “spends too much, taxes too much, and borrows too much” [. . .] Keynesian liberals, meanwhile, counter that the problem is the collapse of demand and that the government’s failure to offer a large enough stimulus is consigning us to a rate of growth not easy to distinguish from stagnation. What if they’re both wrong? That’s the claim of Amir Sufi, a finance professor at the University of Chicago’s Booth School of Business. The data tell a compelling story, he argues: “The main factor responsible for both the severity of the recession and the subsequent weakness of the economic recovery is the deplorable weakness of the U.S. household balance sheet,” which is, Sufi shows, “in worse condition than at any other point in history since the Great Depression.”
Heh. Tomorrow, Galston will invent the wheel.
Speaking for me only
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