Krugman on the basic macro challenge of the Euro Zone

Mysterious Europe - NYTimes.com

He hits the issue on the head. The trade gap and government deficits are related. Germany prospers off their lending to Greece, Italy, Spain and Portugal. What will happen to Germany during the coming recession? They may find out there are worse things than 5% inflation.

Important paper on comparative income inequality

progressiveman (@progressiveman) has shared a Tweet with you: "nytimesbusiness: Economix Blog: Uwe E. Reinhardt: What Does 'Economic Growth' Mean for Americans? http://t.co/LQMRzIQ" --http://twitter.com/nytimesbusiness/status/109592753033326592

New Economic Perspectives: The Sector Financial Balances Model of Aggregate D...

Brilliant analysis...New Economic Perspectives: The Sector Financial Balances Model of Aggregate D...: "By Scott Fullwiler As Stephanie Kelton has recently published two excellent pieces explaining the sector balances in the context of govern..."

Raising Medicare Enrollment Age is a Very Bad Idea

In brief...


...this will kill both Social Security and Medicare. Who can afford to retire on Social Security without Medicare? Not a soul (all your Social Security would go to pay for private insurance). So raising the Medicare age to 67 will make people work longer. Older workers on private health insurance plans will increase the insurance rates for those plans. A dollar "saved" by the government will be a dollar plus spent by private and public employers with their insurers. This will rock public employers that depend on retirees going on medicare to save money.

The Medicare costs per enrollee will rise as you will have removed the lowest cost enrollees in Medicare. So while overall costs will go down it will make Medicare look less efficient than in the past. Fewer people on Social Security, fewer on Medicare means less political support for these critical programs. Means testing just leads to everyone wanting to kill the programs. (By the way, Medicare is already means tested as the more you earn the more you pay in tax).

Structural Problems

When we discuss Macroeconomics in class I try to make sure that students come to understand the difference between cyclical and structural challenges. There is no better description of the structural challenges we face than flipping through the Business Section of today's NY Times...

Here bankers are praising the prospects of Linked In, the social networking company for adults based on contacts around employment and professional interests.

http://dealbook.nytimes.com/2011/06/28/jpmorgan-sets-85-price-target-for-linkedin/?scp=2&sq=linkedin&st=Search

Here the AFL-CIO talks about a commitment to inject $10 Billion in union pension funds into infrastructure construction over the next few years.

http://www.nytimes.com/2011/06/29/business/29labor.html?_r=1&ref=business

The financial sector concentrates on the speculative investment in a firm whose competitive advantage is a marketing concept. It falls to the organization for workers to increase societal investment in social infrastructure. The Obama Administration proposal for a national infrastructure bank languishes in Congress so effort must be made to move the idea along. And the bubble in social networking related stocks continues....from the WSJ...

http://blogs.wsj.com/deals/2011/06/27/linkedin-stock-is-perking-up/

Without government spending we will not move this economy forward except from bubble sparked consumption spending just like last decade.

Great illustration of the trade-off between import and export

Brazil's ethanol exports dry up due to price hike | Reuters

Timely International Discussion

Worries about Aussie dollar link to China - short view - markets - FT.com