I am not so bullish on Europe and America. In both cases, the underlying problem is insufficient aggregate demand. The ultimate irony is that there are simultaneously excess capacity and vast unmet needs – and policies that could restore growth by using the former to address the latter. Both the US and Europe, for instance, must retrofit their economies to address the challenges of global warming. There are feasible policies that would work within long-term budget constraints. The problem is politics: in the US, the Republican Party would rather see President Barack Obama fail than the economy succeed.
