Richard Koo: fiscal stimulus remains essential

- Globalized economies, localized politics
- Extreme economic pessimism has diminished
- Even monetary authorities lack confidence in US economy
- Is recession really attributable to Obama reforms?
- US monetary authorities admit they cannot rule out balance sheet recession
- Two concerns of people who understand that US is in balance sheet recession
- US politics characterized by growing polarization and obstruction tactics
- Obama has proposed second round of fiscal stimulus
- Little chance of new measures becoming law immediately
- Banks in some parts of US are easing lending posture
- Significance of IMF’s support for fiscal stimulus
- Change in stance by IMF and UNCTAD may prevent double-dip recession
- DPJ leadership election debates laid foundation for fiscal stimulus in Japan
- Lessons of the failed social experiment called Incubator Bank of Japan
- Incubator Bank of Japan’s creation also tied to bashing of BOJ and Japanese banks
- Will cap on deposit insurance really be a plus for Japan’s economy?
- Limits to what banks can achieve in a balance sheet recession

Nomura Flash Report 20100915

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