Bond Outlook [by bridport & cie, July 28th 2010]
The FT debate about austerity versus deficit spending continues and is again a useful starting point for our Weekly. Skidelsky and Kennedy argue powerfully in favour of the Keynesian position that government spending is the route out of recession. They emphasise a nuance in that such spending must be directed towards infrastructure renewal and expansion. |
Last week we wrote of the significance of confidence in encouraging expansion. The euro crisis has acted as a siren call, as arguments about what Keynes would advise become irrelevant if confidence is absent, and especially if its absence is due precisely to government deficits. |
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