1. In the United States, large amounts of household debt (especially mortgages) incurred during the past two decades cannot be repaid, while in Europe large amounts of sovereign debt could be repaid only on terms that would prove ruinous (see Keynes’ sadly prescient 1919 book, The Economic Consequences of the Peace). We need new mechanisms for lightening these debt burdens and allocating losses so that demand-led growth can resume and social stability can be preserved....2. The European Union cannot remain where it is. If its members cannot agree to move forward to more centralized institutions of economic management, then it must move backward by loosening the restraints on member-nations and permitting (or even requiring) individual nations under stress to suspend or terminate their participation in the euro....3. Here at home, we must go back to the fiscal drawing-board and implement what economists across the political spectrum recommend—another round of stimulus (well-crafted this time) as part of a package that stabilizes our debt-to-GDP ratio no later than the end of the decade....4. The “Grand Bargain” that matters most is not between Democrats and Republicans, but rather between the United States and China. The world’s two largest economies must finally renegotiate their unbalanced and unsustainable relationship. Just as OPEC learned that a policy of pushing oil prices ever higher eventually yielded negative returns, so China must be brought to realize that a policy of seeking to maximize its exports will eventually undermine itself by slowing growth, and eventually demand for exports, in other countries....
Read the whole article at The New Republic, Four Actions the Global Community Must Take to Avoid Another Depression
William Galston of the Brookings Institution seems to be a deficit dove, but otherwise good recommendations.
