And you are here why?

I'll let CEPR just say this That's the question millions will be asking when they see the new paper   by my friends at the University of Massachusetts, Thomas Herndon, Michael Ash, and Robert Pollin. Herndon, Ash, and Pollin (HAP) corrected the spreadsheets of Carmen Reinhart and Ken Rogoff. They show the correct numbers tell a very different story about the relationship between debt and GDP growth than the one that Reinhart and Rogoff have been hawking. Just to remind folks, Reinhart and Rogoff (R&R) are the authors of the widely acclaimed book on the history of financial crises,   This Time is Different . They have also done several papers derived from this research, the main conclusion of which is that high ratios of debt to GDP lead to a long periods of slow growth. Their story line is that 90 percent is a cutoff line, with countries with debt-to-GDP ratios above this level seeing markedly slower growth than countries that have debt-to-GDP ratios below this lev...

Seriously. You Don't. Wait, I can do better YOU DON'T Ok, a riduclously trite and trivial statement, but the point I'm getting at is that you may think you know what is going to happen.  In fact, for really small time horizons, you probably have a really really good idea.  For example that slice of toast that you just dropped is absolutely positively going to land buttered side down on your expensive persian carpet. But, slide the time horizon out, say, 5 years, and what d'you get?  Is that carpet still going to be there?  Will you still like toast?  Will butter be outlawed?  Who the heck knows? Which is why I love it when our elected officials make decisions based on tax receipts 10 years out.  Remember the crazy Bush tax cuts ?  As a memory jog, we were supposed to have surpluses as far as the eye could see, and decided to cut taxes pre-emptively.  We all know how that turned out. And now, it looks like Medicare growth is slo...

Mobility Historically, when life got too difficult in a given part of the country, us Americans were perfectly willing to pack our bags and move (to California, as it were).  From a labor mobility perspective, this is brilliant - labor shortages in North Dakota are solved by surpluses in Nevada, Pennsylvania by Florida, etc.  There is a bit of a downside to this - we need to be willing to tolerate massive de-population in some states (and, as it turns out, we are willing.). Admittedly, the housing crisis has put a bit of a dip in this mobility - people can't Just Move when they have an underwater mortgage to deal with - but lets ignore that for the nonce. Borders The thing is, in the end, us Americans tend to move around only within America .  Its pretty difficult to go further East or West - not too much happening in the Caribbean, and Siberia sucks.  North and South, well, Canada and Mexico.  Seriously, its not that there is anything wrong with ei...