His statement last night to do between the Congress and the White House to raise the debt ceiling, President Obama has said that Washington's leaders are now "must be addressed to all of our time" to address the economic ills more general. But the contract itself could be a big impact on the economy is in trouble, if it passes Congress.
So, what is much more likely to mean for ordinary Americans?
Of course, the most important short-term effects of a plan to cut spending at least $ 2.4 trillion over the next ten years, is that the U.S. debt to avoid default. And 'unequivocally positive. Economists had warned that the default would be disastrous for everyone, throwing the world's financial markets into chaos and to initiate the rise in interest rates for years or even decades.
In addition to avoiding a standard, could potentially help treat boost the economy as a whole, as it managed just 0.8 percent growth in the first half of the year, with unemployment at 9.2 percent and talk about a double dip recession growing higher.
In a memorandum to investors released on Sunday by Mark Zandi, chief economist at Moody's Analytics prestigious, called the agreement "a big plus ... struggling economy." The uncertainty about the debt ceiling impasse, Zandi argued, has contributed to slow economic growth. "Business leaders are very nervous, and more efficient by taking up this drama has been resolved," he wrote. "Employers are not going to make that leap of faith, and to expand, given how little faith they have that policy makers will come through in time." When the problem is solved - assuming, of course, that a lot of passes Congress - that the mind can change.
Other economists say the agreement will not only reduce the uncertainty in the debt ceiling, but the broader issue of the deficit. By showing that business means Washington in combating these problems, they argue, the agreement will increase business confidence and boost the economy.
But it does not just raise the debt ceiling. It also calls for 2.4 trillion in cuts over the next decade. And that's where the effect may be less positive. Most economists say that reducing government spending when the economy is weak, is likely to cut jobs and growth by further weakening demand.
"Unemployment will be higher than it should," said Mohamed El-Erian, chief executive of Pimco, the world's largest bond investment, yesterday on ABC News. "The growth will be lower than otherwise. And inequality will be worse than it should."
How much? It is difficult to say precisely because it depends on which programs are cut, and it has not yet decided. But to have a rough idea, consider this: Zandi, who has worked with both Democrats and Republicans, determined in February that the original budget passed by Parliament earlier this year that cut $ 100 billion in spending in 2012, cost about 700,000 jobs by the end of 2012. The agreement announced yesterday calls for an annual average of $ 240 billion in cuts over the next decade. Very roughly, suggesting that the new plan will cost about 1.6 million jobs per year during this period.
Because the cuts are designed to be small in the coming years, the economy remains weak, then more during the latter part of the decade, that number is probably inflated. There is no doubt that the agreement will result in a significant drag on employment, at a time when more than 14 million Americans are out of work.
And the consensus is that job losses are more important than the positive effect of business confidence has increased. "When you look at the history of these things, the conclusion is that we should not delude ourselves," Paolo Mauro International Monetary Fund and an expert on the effects of downsizing, told the New York Times. "When you made fiscal adjustment in the short term, it has a negative impact on economic growth. "
The last point, which deviated from the center of relief over the deal: the rating of the United States may be less, however. The two major rating agencies warned last month that they had a genuine charm, thanks to concerns about Washington's ability to address long-term deficit problem.
Zandi in her statement to the judges that the debt ceiling of Commerce is likely to be enough to convince rating agencies to maintain the triple. But today, investors do not appear to be safe: Reuters reports that there is still a "general assumption" that is coming true, at least some authority. In this case, it would be difficult not only to Government but to ordinary Americans to borrow money, and the stock market will probably take a big impact.
So what is the first conclusive? It is quite obvious that the most fundamental level, the agreement debt ceiling is an asset to the economy because it keeps the country out of a catastrophic failure. But at least in the short-term savings that come with the journey to the task of fixing the economy and get Americans back to work to increase even more.
So, what is much more likely to mean for ordinary Americans?
Of course, the most important short-term effects of a plan to cut spending at least $ 2.4 trillion over the next ten years, is that the U.S. debt to avoid default. And 'unequivocally positive. Economists had warned that the default would be disastrous for everyone, throwing the world's financial markets into chaos and to initiate the rise in interest rates for years or even decades.
In addition to avoiding a standard, could potentially help treat boost the economy as a whole, as it managed just 0.8 percent growth in the first half of the year, with unemployment at 9.2 percent and talk about a double dip recession growing higher.
In a memorandum to investors released on Sunday by Mark Zandi, chief economist at Moody's Analytics prestigious, called the agreement "a big plus ... struggling economy." The uncertainty about the debt ceiling impasse, Zandi argued, has contributed to slow economic growth. "Business leaders are very nervous, and more efficient by taking up this drama has been resolved," he wrote. "Employers are not going to make that leap of faith, and to expand, given how little faith they have that policy makers will come through in time." When the problem is solved - assuming, of course, that a lot of passes Congress - that the mind can change.
Other economists say the agreement will not only reduce the uncertainty in the debt ceiling, but the broader issue of the deficit. By showing that business means Washington in combating these problems, they argue, the agreement will increase business confidence and boost the economy.
But it does not just raise the debt ceiling. It also calls for 2.4 trillion in cuts over the next decade. And that's where the effect may be less positive. Most economists say that reducing government spending when the economy is weak, is likely to cut jobs and growth by further weakening demand.
"Unemployment will be higher than it should," said Mohamed El-Erian, chief executive of Pimco, the world's largest bond investment, yesterday on ABC News. "The growth will be lower than otherwise. And inequality will be worse than it should."
How much? It is difficult to say precisely because it depends on which programs are cut, and it has not yet decided. But to have a rough idea, consider this: Zandi, who has worked with both Democrats and Republicans, determined in February that the original budget passed by Parliament earlier this year that cut $ 100 billion in spending in 2012, cost about 700,000 jobs by the end of 2012. The agreement announced yesterday calls for an annual average of $ 240 billion in cuts over the next decade. Very roughly, suggesting that the new plan will cost about 1.6 million jobs per year during this period.
Because the cuts are designed to be small in the coming years, the economy remains weak, then more during the latter part of the decade, that number is probably inflated. There is no doubt that the agreement will result in a significant drag on employment, at a time when more than 14 million Americans are out of work.
And the consensus is that job losses are more important than the positive effect of business confidence has increased. "When you look at the history of these things, the conclusion is that we should not delude ourselves," Paolo Mauro International Monetary Fund and an expert on the effects of downsizing, told the New York Times. "When you made fiscal adjustment in the short term, it has a negative impact on economic growth. "
The last point, which deviated from the center of relief over the deal: the rating of the United States may be less, however. The two major rating agencies warned last month that they had a genuine charm, thanks to concerns about Washington's ability to address long-term deficit problem.
Zandi in her statement to the judges that the debt ceiling of Commerce is likely to be enough to convince rating agencies to maintain the triple. But today, investors do not appear to be safe: Reuters reports that there is still a "general assumption" that is coming true, at least some authority. In this case, it would be difficult not only to Government but to ordinary Americans to borrow money, and the stock market will probably take a big impact.
So what is the first conclusive? It is quite obvious that the most fundamental level, the agreement debt ceiling is an asset to the economy because it keeps the country out of a catastrophic failure. But at least in the short-term savings that come with the journey to the task of fixing the economy and get Americans back to work to increase even more.
No comments:
Post a Comment