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2011-09-08

US cannot avoid Japan-style stagnation

Comments on Anatole Kaletsky “Barack Obama can still pull US back from a slide into Japan-style stagnation”, 8/09/2011, http://www.theaustralian.com.au/news/world/barack-obama-can-still-pull-us-back-from-a-slide-into-japan-style-stagnation/story-e6frg6ux-1226131676602

A major weakness of and indeed a serious problem with this analysis and the reforms is that most of European economies are in deep troubles too at the moment.
Secondly, what do some of the proposals mean for the two government owned lenders in terms of their profitability and solvency?
Further, while it is true that investment in aged infrastructure can be profitable and productive, the US government does not have the capacity to do it because of its very high levels of debts. It has to rely on the private sector to invest and that would require privatisation that would take time and whether it is now politically viable or not remains an open question, although in the medium and long run it is inevitably required to do so.

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