My co-author, Simon Johnson, will be on C-SPAN’s Washington Journal show tomorrow (Tuesday) morning from 7:30 to 8:30 in the morning, U.S. Eastern time. He’ll be discussing – what else? – the global credit crisis. It’s a call-in show, so you’ll be able to submit questions live.
Update: You can see now watch the show online here.
The Baseline Scenario 
Wonderful job this morning. Thanks
I am so happy I watched this show…
You enlightened us. We seem to understand a little more about this money thing.
We have been retired 19 years.
Have been comfortable with those years. We are concerned for our future. I had broker move funds out of Freddie and Fannie. I talked to him a few days ago and he said had “WE” not moved it out we would have lost it all..I (Pat) am the one that has to be on my toes to direct him it seems. He sold Bank America and bought Ginnie Mae,(HUD)? He assures us this has performed well. We have to go by that until I can research it.
Suze Orman says place all funds in Bonds. Did not name any.
What is your take on this comment?
Thanks so much,
I watched as well. It’s how I found the site. Can you explain: if there is a credit crunch how can the US government help? The $700 billion that has been allocated must be borrowed. We don’t have it in the bank. Won’t credit shortages be aggravated by the US government borrowing more and more?
I keep hearing about the global economy. The only thing that has gone global are American jobs. How are Americans supposed to buy a home, pay the mortgage and pay their bills when they can’t earn a salary that covers expenses? Not everyone is an entrepreneur. Most jobs left in the US that pay a middle class wage are paid for out of tax revenue.
Has anyone considered the impact of offshoring and outsourcing? Americans who can’t make a living have a hard time paying the bills. This is a consumer-driven economy and the consumer is being squeezed.
It is true that in order to invest $700 billion in “troubled assets,” the government has to borrow more money. Luckily for the U.S., we can borrow money more easily than any other country in the world, because our government debt (Treasury bonds) is considered the safest in the world. In fact, in the financial markets, U.S. Treasury debt is the definition of “risk free.” One consequence of this is that, in times like these, people pull their money out of other investments and buy Treasury bonds, which lowers our cost of borrowing. Treasury will then put that money into the banks (by buying their assets). So this is a way to pull money out of people who will only lend it to the U.S. government and redirect it to banks, who can then lend it to other companies.
Now, taking on more debt is not a free lunch. If nothing else, the interest we pay on the debt eats into the budget available for government programs. But right now I think most economists think it is better to take on more debt in order to combat the recession that many people think we are already in.
The global economy is good and bad for Americans. This is a complex issue that I don’t want to try to resolve in a few sentences, so I’ll just make one point on each side. Global competition for jobs should limit growth in wages here in the U.S., because companies can send those jobs overseas. At the same time, however, the global economy keeps inflation low because we Americans, as consumers, benefit from the lower cost of production in some overseas countries. Many economists have studied this in detail and there are strong arguments on both sides.