A Free Lunch

Obama, a pure Keynesian, believes that government spending helps the economy grow.

The president feels that the recession is caused by a lack of demand and that the government can fill the gap in demand by government spending. Further, the candidate believes that increased taxes on the wealthy do not have an impact on economic growth.

Therefore, Obama wants to increase spending and increase taxes through stimulus bills. Similarly, he plans to increase employment by additional spending on infrastructure.

However, Obama does plan for targeted tax cutting for small businesses to encourage them to grow and hire new employees.

Overall, I suppose that, according to Obama, there is such a thing as a free lunch.

Source: http://www.barackobama.com/record/economy?source=primary-nav

Rock the Boat

Someone is rocking the boat on the way to the old world.

Due to the extreme sovereign debt problems with the PIIGS (Portugal, Italy, Ireland, Greece, and Spain), the Eurozone might break up in the near future.

The PIIGS are uncompetitive and unable to devalue their currency, since they are part of the Euro, which countries normally do when they face excess debt, their economies are poor, and they are uncompetitive in the global market.

I personally hope that the Eurozone breaks up, for my own selfish reasons. I would love to travel to Italy using the Lira, to revisit Spain using the Peseta, and to visit Greece using the Drachma.

Caio. 

Article: The Economist, "Is this really the end?", November 26, 2011.