Economist Nouriel Roubini says governments should provide more stimulus up front, then later commit to austerity.
“President Barack Obama must again persuade America’s taxpayers that a new surge in government spending is needed to protect a fragile recovery – and at a moment when voters are telling pollsters that America’s debt is as great a threat as terrorism,” Roubini and Eurasia Group president Ian Bremmer write in the Financial Times.
“Plans to boost government spending in the near term, and to embrace austerity in the longer term, will only become more difficult if the president fails to explain the need for them.”
For their part, Roubini and Bremmer say, America’s Republicans need to accept that the path to a global recovery begins at home, with extended unemployment insurance and help for state and local governments.
Even so, the most realistic scenario for global growth is painful, even if a double-dip recession is avoided, the two note.
In the United States, 1.5 percent growth in the second half of this year and into 2011 will feel like a recession, growth in the eurozone will be close to zero by the end of the year, and China’s growth engine is slowing considerably.
In recent elections, the ruling Japanese party, the Democratic Party of Japan (DPJ), lost its control of the upper house of the nation’s legislature, which may push initiatives which include higher taxes and austerity programs, set to be enacted almost immediately, more difficult, 24/7 Wall Street reports.
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