Zombie Claim #1: American businesses are scared and pulling in their horns because they lack confidence.Sadly most Americans don't bother reading any honest news coverage. A big chunk are fans of Fox "News" which is a pure propaganda arm of the ultra-rich pandering to social conservatives in order to get the tax and regulatory policies they want (and never getting around to passing anything to satisfy the "base" on social issues). It is lies and manipulation but the redneck right wing in the US hasn't caught on after 30 years that they are being used purely to advance the economic agenda of billionaires.To the contrary, American businesses are not scared and are not pulling in their horns--rather, they are investing for the future at a furious rate. Business investment in equipment and software is back to its pre-recession peak--it is investment in residential construction that is depressed:
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Zombie Claim #2: America has overinvested in housing and needs the construction sector to be depressed for a while.To the contrary, the housing bust has now been much longer and deeper than the mid-2000s housing boom--we are now far below trend in the cumulative number of houses built:
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Zombie Claim #3: America has too much public debt.To the contrary, the pubic debt of America is selling at unbelievably high prices because savers are desperate to hold it. With $1 of cash flow devoted to interest payments you can currently borrow $50 long-term if you are the U.S. government but only $18.20 if you are a U.S. Baa corporation. When the public sector has such an enormous market advantage over the private sector in its cost of funds, the market is telling us as loudly as it possibly can that now is the time for the government to be spending more and taxing less than usual and thus running up its debt.
Monday, September 5, 2011
Republican Zombie Lies
From a post by Brad DeLong on his Grasping Reality with Both Hands blog: