Friday, July 22, 2011

Also Sprach Macroadvisors

Debt Ceiling Chicken is a game for fools:
Compared to our baseline forecast, this fiscally induced “shock” creates a growth recession. Its later effects could be partially offset by an expected monetary easing but it would almost certainly be too late now for the Fed to prevent an initial slowing of growth and rise in the unemployment rate. It seems the height of policy folly for elected officials, intent on a game of budgetary chicken, to chance this downside risk during an economic recovery that was sub-par to begin with and lately seems to have faltered further. Sometimes in a game of chicken, people get injured—seriously.
A plague on both their Parties.

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