• Reflex: December 1, 2011

    The Department of Justice appealed the District of Columbia court ruling that blocked the graphic tobacco warningsKevin’s commentPrevious TIE coverage here.

    Central banks seek to backstop global financial system, writes David McHugh and Paul Wiseman. Coordinated efforts by central banks around the world seek to make it easier for businesses to borrow money, hopefully forestalling a global recession. Don’s commentI am not sure if these efforts will work, or even what the definition of what work means, but if the U.S. and the rest of the world slip into a recession, then all of the short, medium and long range fiscal problems discussed on this blog will be even worse as tax revenues fall. Even the scary scenarios a decade out assume some consistent economic growth over the period.

    Via Igor Volsky: “Republicans push for greater means testing in Medicare: ‘Republicans are proposing means-testing Medicare in order to pay for an extension of the payroll tax cut, The Hill’s Bernie Becker and Erik Wasson report. The idea of reducing federal benefits for higher-income earners was embraced by President Obama during the recent debt negotiations.’ [The Hill]” Austin’s comment: Means testing already exists in Medicare. AARP opposes more of it.

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    • The key question is whether the central problem affecting Europe is liquidity or solvency. If it’s liquidity – then loaning more money to fundamentally solvent entities will help. If Europe is insolvent, then loaning more money will only delay and exacerbate the final reckoning.

      Do the math and it’s clear that Europe is fundamentally insolvent, and it’s economic output will never be sufficient to satisfy all of the future claims upon it. The only real solution is a massive haircut for creditors on debt that can’t possibly be repaid at par, and a fundamental restructuring of the underlying economies that enables them to increase their output.