More broadly, the Oxford Economics team seems blissfully unaware that we subsidize debt through the tax code and through implicit government guarantees.
If the Treasury secretary, acting for the president, seeks to subsidize debt relief in a way that actually strengthens the finance agency, the agency's chief has no business blocking that policy.
The report confirmed widespread suspicions here that the government had failed to keep close watch on much of the $120 billion it had poured into companies to subsidize debt workout programs.
Contrast this risk-sensitive response with the pre-crisis period, when euro-area prudential policymakers repressed market discipline (and depressed risk premia) by treating all sovereign euro-area debt as risk free, thereby subsidizing unsustainable debt accumulation.
Subsidizing corporate debt is just too risky.
In the face of competition from the Federal Housing Administration -- which also aggressively subsidizes housing debt -- Fannie's chief recently emphasized that it "wants this business".
This would temporarily liberate a substantial amount of resources that could be used in many different ways (e.g., lowering taxes, increasing spending, lowering the debt, subsidizing credit).20.20
Venezuela built strong relationships with Brazil, Argentina, Ecuador, and Bolivia by subsidizing their external debt and providing oil while the United States continued to disengage from the region.
Otherwise, the absurd positive feedback loop will continue: consumer debt, subsidized Chinese imports, American job loss and factory closures, the growing U.S. current account deficit, burgeoning Chinese currency reserves reinvested in American debt..
