I would like to say that I have read David Stockman, and agree with much of what he had to outline. Menzie Chinn, though, has a much more illustrative Post, and clarifies the status of the last Recession. I do not exactly perceive his great rebound in Investment, especially as much of it was the importation of capital goods. His sidekick blogger, James Hamilton, also has an interesting Post, and my only comment must be the Question: How long can they expect to generate side-paper Profits in a real term declining economy? They will have to eventually insist on the foreign paper trade insisted upon by Arnold Kling simply to prevent US Imports from becoming unapproachable.
I will now turn to this Work by Calculated Risk. The sum of $771 billion of net inequity carries no unmanageable element, if the debt is quickly sent into receivership. Carrying deadweight is the most precarious factor in such debt, with no one able to get a Restart. Homeowner, Bank, and SWAP have no chance to Write-Off and regalvanize. It becomes a debt slavery with too easy escalation in a scenario of degrading capital. We need more than to rewrite Paper.
I will give this Gift to the wonkish within the Reader. I would advise the Reader, though, not to read this material if there exists no pressing Classroom assignment. I have never been in favor of Cap-n-Trade, far preferring a booked simple Carbon Tax rate with resplendent supplement to actual needy recipients. I enjoy the flat Carbon tax over the progressive Carbon tax as it allows the easiest entrance into industry, and the greatest pressure to expel Carbon exhaustive users by maintenance of a normalized Pricing structure; something that a progressive Carbon tax system could never attain. Cap-n-Trade will always bring entrance issues, and a Profit hedge for heavy Carbon use. lgl