Moderate Medicine

“Moderation in all things” seems a sensible rule of thumb. But for some economists, when it comes to government spending, you can’t get too much.

For months, Nobel-laureate Paul Krugman has been berating the Obama administration for its stinginess in only approving a $700 billion stimulus package. After all, global real estate probably declined by about $5 trillion. If half of that occurred in the U.S., then the government is making up only a fraction of the loss.

It’s understandable that many people want a pain-free recession. So they’re pushing for a bigger bailout. But there are limits to everything. When your body’s sore, a little Tylenol helps. But if the pain persists, most people know enough not to swallow the whole bottle. The federal deficit is now scheduled to run at 8% of GDP-6% above its normal recession peak. Any more medicine may just make this patient more sick.

Moderation means walking down the middle of the road. But it seems that any moderates here are likely to be run over by a government steamroller.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T18:34:41+00:00 June 9th, 2009|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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