A User’s Guide to Obama’s Inside-Out Economics – Bloomberg 08-07-13

Salient to Investors:

Caroline Baum writes:

Obama is great when it comes to platitudes but less adept at outlining the policies needed to achieve those goals.

Robert Litan at Bloomberg Government said Obama would like all employers to pay efficiency wages, but does not have an executive order to do that.

It is individuals with ideas that raise our standard of living. Productivity growth comes from new technologies.

The path of wealth creation is top down, not inside out.

The top 1 percent were not responsible for the lax lending standards and subprime loans that were the cause of the financial crisis. Income inequality contributed to the bubble.

Raghuram Rajan at the Reserve Bank of India wrote that lower and middle-income households reacted to stagnant real incomes by taking on more debt. What they could not afford, they bought on credit. Rajan said the policy response was to encourage lower lending standards and promote affordable housing.

Obama boasts that the deficit is falling at the fastest pace in 60 years, but this ignores the relentless rise in debt as a share of the economy. Unless the federal government raises revenue and/or cuts spending over the next decade, there will be steep cuts to programs such as Social Security and Medicare.

Read the full article at  http://www.bloomberg.com/news/2013-08-07/a-user-s-guide-to-obama-s-inside-out-economics-caroline.html

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