A Therapeutic Bit of Retraction

By April 4, 2008Economy

Always worth considering, is Larry Kudlow on the economy. “An Economic Cleansing” is the first time we’ve seen him say, yeah, maybe there is a recession. But then, let’s use it to rectify policy:

[Domestic] corporate profits are down 20 percent from their peaks of late 2006. Since profits are the mother’s milk of stocks, businesses, and the economy, we will need to see profit improvement before the recovery-turn can be called.

How this recession affects the presidential race remains to be seen. Hill-Bama are calling for big-government spending and trade-protection — exactly the wrong medicine. Oh, and did I say tax hikes? Just what the doctor didn’t order. If government wants to play a role, economic policymakers should reduce the corporate tax rate to generate more profits, more jobs, and higher real wages. That would reignite the economy. Home prices and sales should be driven by corrective market forces.

Meanwhile, the U.S. dollar, which some are now calling the U.S. peso, should be appreciated in order to curb inflation. Inflation is the biggest economy-killer of all. Whether Sen. McCain will adopt Reagan-style growth policy to lower taxes and curb inflation remains to be seen.

Which allows us to link to a Wall Street Journal we overlooked earlier in the week, “Hoover’s Heirs.”

Join the discussion One Comment

  • Darryl Wright says:

    Hey! I object to the Peso being compared to the dollar! The Mexican Peso is stable, and has not been as mismanaged in the past 12 years as the US dollar.

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