Articles Article 17 With the current economy of 2009 consumers are saving too much in a time when they should be spending to help the economy The savings rates have been the highest in years Consumers had to spend more modestly something they weren t used to from past years Consumer debt fell and consumer borrowing continued to decline It could be because Americans were worried about their jobs economy or even retirement There is a sudden rise in the savings which is the problem and consumer savings aren t being put into the bank but other forms that are going into the economy Article 18 Is public investment in infrastructure productive Public investment generally has a positive impact on growth as supported by the World Bank Net capital stock is the key determinant of productivity and investment flows do not provide any information on the share of investment required to replace depreciating capital stock Public investment affects growth but growth affects public investment Public investment and public capital can grow at different rates Public capital doubles while public investment only increased by 3 6 percent in developed countries The value of capital stock is calculated using the perpetual inventory method The effects of public capital on growth diminish over a long time Developed countries use public investment as a demand management tool to counter the business cycle Certain types of constraints such as financing can limit higher capital stock s benefits on growth when countries create room in the budget for high public investment Developing countries can gain from nonconcessional foreign borrowing to finance new investment however the benefits from such investment may accrue only over time Article 19 Globalization is not merely an economic process it has deep social cultural and environmental consequences The real core of the Great Recession is a fixed investment collapse Majority of the fall in GDP is due to the fall in investment sometimes the fall in investment is greater than the fall in GDP Consumer and government expenditure is overshadowed by investment expenditure This article looks at OECD as a whole Germany Japan Europe France UK Italy Spain Portugal Greece etc For Germany the net trade balance also affects the fall in GDP For majority of these countries the fixed investment fell more than the entire decline in GDP China focused on investment with a stimulus package and increased their net income as the European countries and the US declined in GDP due to investment Article 20 North American faces a Japan style era of high unemployment and slow growth In the 1990s Japan was confronted with slow growth and high unemployment The Japanese government wouldn t have raised taxes if it had known what was in store Fiscal tightening for America is a bad idea in its own right but it s particularly ill advised given that stuff happens as shown in Europe Slow growth and fiscal policies are the main focuses in this article Article 21 Central bank lending to government serves a valuable though risky purpose Throughout history central banks have been lenders of last resort to their governments Bond purchases expand the money supply and can lead to inflation forcing banks to pay punitive interest rates Using inflation to repay debt is a valuable fiscal shock absorber that over time may be less expensive than the risk To avoid all of this bonds must be purchased only at market prices bonds can be bought on the secondary market Central banks have taken liberties with their mandates when financial stability was at stake Article 22 Lower income households tend to experience higher inflation rates than higher income households as it can be concentrated on food and energy which a higher proportion of the spending baskets for the poor than for the rich Higher inflation rates only affect the half of the rich and their income They have more of their savings in equities and property rather than on cash deposits The CPI better matches the spending patterns of the poor The current core rate neglects food and energy which is what the poor spend more proportionately on Article 23 The stock market s annual performance is comfortably in the black again and this may be a sign that the economy will keep growing The stock market has value for evaluating the macro trend Only one of the previous eight recessions has struck without a decline in the S P 500 s annual percentage change The equity market anticipates changes in industrial production at roughly six to eight months in advance You can t count on the stock market for flawless forecasts but there are implied predictions Article Extra Economists have a worse record to predicting recessions than the stock market We aren t heading into another recession says most people but another organization with a good track record says that a recession may already be here The organization believes more pain is coming as the unemployment rate will go higher There should be a growth of 2 in 2012 France and Germany will soon be in a mild recession which will contribute to a slowdown in the US Another theorists believes that the GDP rate will become negative More frequent recessions are likely to be the norm