Archive for November 2012
The complex effects of low interest rates on consumption and investment
Dec 1st 2012 | from the print edition
[Greg Ip] WHEN interest rates hit double digits in the late 1970s, house-builders sent planks of wood to the Federal Reserve in protest. With rates stuck near zero, the protests now come from the opposite direction. The retired complain of a “war on savings”.
The Fed cut rates to current levels at the end of 2008 and has promised to keep them there until 2015. Since 2008, personal interest income has plunged 30%, or $432 billion at an annual rate, more than 4% of disposable income. David Einhorn, a hedge-fund manager, likens zero rates to an overdose of jam doughnuts: too much of a good thing. Raghuram Rajan, a former chief economist for the International Monetary Fund, describes the Fed’s policy as “expropriating responsible savers in favour of irresponsible banks”, and thinks it should raise rates modestly. Read the rest of this entry »
Nov 29th 2012, 21:37 by G.I. | WASHINGTON, D.C.
Regulators seek to shore up money-market funds against runs
Finding common ground on cutting spending
Nov 24th 2012 | WASHINGTON, DC | from the print edition
Barack Obama and Republicans grope towards common ground on taxes
Nov 17th 2012 | WASHINGTON, DC | from the print edition
Setting a cap on deductions is a better starting point than raising tax rates
Nov 17th 2012 | from the print edition
Nov 8th 2012, 23:33 by G.I. | WASHINGTON, D.C.
This post has been updated.
PRESIDENTS choose their words carefully. So when Barack Obama talked of “tax reform” but not “tax rates” in his acceptance speech early Wednesday, he was presumably sending a signal. And it was similarly significant that later that day John Boehner repeatedly stated his opposition to higher tax “rates” rather than tax revenue.
Within those two statements lies the nucleus of a deal: raising tax revenue through some means other than higher tax rates. Read the rest of this entry »