Must-Read: The great and the good of the non-insane wing of Global North Neoliberalism seem–or so I read it–to now be calling for a transition to a two-handed growth-supporting economic policy: fiscal expansion (by governments with ample fiscal space) and “structural reform”. Their hope, I think, is that “structural reform” will reassure those who otherwise make a profession out of panicking over government debt levels–even governments that issue reserve currencies, possess exorbitant privilege, and that have debt currently valued by the markets as more precious than rubies. Their hope, I think, is that fiscal expansion will produce fast enough growth to make that plus “structural reform” genuinely win-win, and that the promise of enough fiscal expansion will quiet those Keynesians who otherwise would vociferously oppose what they see as yet another round of upward redistribution under the guise of “structural reform”.
Ah. But what are these “structural reforms”? Federal and state action to make it much easier to build infill and up zone housing in greater San Francisco is the only thing I can think of that commands general and universal assent (and even there, the bulk of we greater San Francisco home owners are in opposition):
: Is the Perfect Storm Over for Markets?: “LAGUNA BEACH – Earlier this year, financial markets around the world were forced to navigate a perfect storm…
…The longer these disturbances persisted, the greater the threat to a global economy already challenged by structural weaknesses, income and wealth inequalities, pockets of excessive indebtedness, deficient aggregate demand, and insufficient policy coordination. And while relative calm has returned to financial markets, the three causes of volatility are yet to dissipate….
First, mounting signs of economic weakness in China and a series of uncharacteristic policy stumbles there…. Second, there are still legitimate doubts about the effectiveness of central banks, the one group of policymaking institutions that has been actively engaged in supporting sustainable economic growth…. Third, the system has lost some important safety belts, which have yet to be restored. There are fewer pockets of ‘patient capital’…. OPEC… has stepped back from the role of swing producer on the downside….
All this came in the context of a US economy that continues to be a powerful engine of job creation. But markets were not voting on the most recent economic developments in the US. Instead, they were being forced to judge the sustainability of financial asset prices that, boosted by liquidity, had notably decoupled from underlying economic fundamentals….
Durably stabilizing today’s markets is important… for a system… [with] too much financial risk… requires a policy handoff… more responsible behavior… transition from over-reliance on central banks to a more comprehensive policy approach that deals with the economy’s trifecta of structural, demand, and debt impediments…