Setting Ourselves Up for Another Recession
Posted at 10:30 a.m. on Sept. 11
Four years after the Great Recession, “the US is building again, but on foundations of sand,” writes Robin Harding, noting that “the US is headed back to the same economic structure as before the recession: driven by consumption and sucking in imports. These are the first steps towards a future crisis.”
“Policy makers cannot prescribe the balance of the economy but there is still much they could do to build the US recovery on firmer foundations. The first and most obvious step is reform of the housing finance agencies Fannie Mae and Freddie Mac… to reduce the artificial subsidy they put into the mortgage market.”
“The most important element of a better balanced economy is investment, both public and private. That means finding a way to stop the macroeconomic insanity of sequestration cuts to investment in scientific research, education and infrastructure.