Friday, May 7, 2010


The government has announced a 3-yr spending freeze. It wasn't so long ago that we were told that no austerity program would be necessary or desirable. The question of whether austerity is desirable, particularly now, remains alive. I fear that the world is about to repeat FDR's mistake of anticipating the end of the crisis and cutting spending too soon, the effect of which was to precipitate a new downturn. This is a dangerous moment, and France seems to have been the first to retreat.