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I recommend this article by Lawrence Summers.
Here is his central theme: "If a moment when the government can borrow for 10 years at less than 2 percent, when unemployment among construction workers is well into double digits, and when the price of building materials is depressed is not the moment for infrastructure investment, it is hard to imagine when that time will come."
Monday, September 12, 2011
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I would agree with having a 10 year plan and had we started an infrastructure saving account 10 years ago we would have the dollars to take advantage of the current situation. The previous sentence is a bit tongue in cheek since I have no expectation that congress would let any excess money set around for 10 years, but an infrastructure saving account does seem to have merit.
ReplyDeleteBut what I get from the article is that Summers is implying that the US should jump on the current 2% money and call that a 10 year plan. 2% Interest payments are still interest payments and debt still has to be serviced (never mind paying down the principle). Still, infrastructure is a special issue and I believe it deserves special consideration, however I am not buying into any notion of a chronic problem with bridges crumbling as I drive down the road.
The article is in character for Mr. Summers. On Summer’s advice, Harvard entered into swap positions that resulted in Harvard having to pay over $497 million in fees. The incident has been termed a "massive interest-rate gamble" that ended badly.