The Fear Factor
The dominant macroeconomic paradigm since the early 1980’s does not include unemployment as a factor, and it does not assign an independent role to confidence. But confidence is a scientific concept that can be inferred from observing asset price movements.
LOS ANGELES – The debate over fiscal expansion versus consolidation continues to divide the developed world. In response to the global recession of 2008, the United Kingdom embarked on an austerity program while the United States enacted an $800 billion fiscal stimulus. Despite a softening economy, British Prime Minister David Cameron is promising to stay the austerity course. Obama, too, is sticking to his guns with his recent proposal for an additional $450 billion of government expenditure and tax cuts to help boost employment.
LOS ANGELES – The debate over fiscal expansion versus consolidation continues to divide the developed world. In response to the global recession of 2008, the United Kingdom embarked on an austerity program while the United States enacted an $800 billion fiscal stimulus. Despite a softening economy, British Prime Minister David Cameron is promising to stay the austerity course. Obama, too, is sticking to his guns with his recent proposal for an additional $450 billion of government expenditure and tax cuts to help boost employment.