In effect employers are so desperate for staff that they are pleading with any passing stranger to come in and take a

Posted by admin · · Jump to comments

In effect, employers are so desperate for staff that they are pleading with any passing stranger to come in and take a job. Yet there is no better indicator of an overheating economy than "help wanted" signs in shop windows. The R-word count has shot up since last summer, foreshadowing official figures showing that growth slowed almost to a standstill in the final three months of last year. ONE OF the best indicators of an approaching recession is simply the number of times the word is used in the newspapers. But if he looked at today's global economy and heard Bill Clinton's latest proposal, he might be stirring in his grave.Robert B Reich, the former US labor secretary, is university professor of social and economic policy at Brandeis University. Fiscal prudence (cutting deficits, balancing budgets, and, ultimately, saving surpluses) is presumed to be the best means of assuring prosperity, under all circumstances.Lord Keynes isn't with us any more. Large public deficits are presumed to be bad; public debt is presumed to be undesirable.

That's because most people alive today remember the double-digit inflation of the 1970s, but not the Great Depression of the 1930s. The only remaining purchaser - the buyer of last resort, as John Maynard Keynes demonstrated 60 years ago - is the government.And yet, it is precisely now that public budgets are being slashed all over the world. The price of admission to join Europe's euro has been to get deficits down to under 3 per cent of national product. The International Monetary Fund is demanding budget austerity as the price every Third World nation must pay for obtaining a loan.We have become so accustomed to thinking of inflation as our biggest challenge that we have stopped thinking about the dangers of deflation. Just about the only people on the planet who are still buying like mad are American consumers, and they cannot keep it up much longer They are going into debt. So where will the demand come from? Businesses will not invest if they have too much capacity.

Don't count on Southeast Asia to buy much from the rest of the world. Germany and France, still suffering double-digit unemployment, are slowing down The Brazilian economy is teetering. There isn't nearly enough purchasing power to consume everything the United States and the rest of the world are capable of producing.Some 40 per cent of the global economy is already in recession Japan remains flat on its back. You see that the global economy is rapidly approaching overcapacity. Suppose, like me, your biggest worry is the very real possibility of worldwide deflation. The American economy will be on "a more solid footing", to quote the phrase that has been used repeatedly in praise of the President's plan.But suppose your biggest worry isn't inflation, and the corresponding concern that public borrowing may "crowd out" private investing.