Interesting talk given by Economist Richard Woo:- <object style="height: 390px; width: 640px"><param name="movie" value="http://www.youtube.com/v/OWGDWYB5KZ0?version=3"><param name="allowFullScreen" value="true"><param name="allowScriptAccess" value="always"><embed src="http://www.youtube.com/v/OWGDWYB5KZ0?version=3" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="640" height="390"></object> An good presentation, with lots of nice charts etc. even if I'm not convinced by the thrust of his argument. But then I'm not really a Keynesian... Woo argues that US UK and EZ should run bigger fiscal deficits because of private sector develeraging (paying down the debt), citing the Japan "success" in never letting nominal GDP drop below pre bubble levels. My own thought - Would it better for the government to directly lend to the private sector instead of spending the money themselves? Large sections of the private sector would like to borrow at near zero rates, but the banks are not willing lenders because they are trying to repair balance sheets. It is not a case of small businesses not wanting to borrow, more that banks massivley tightened up lending standards. Maybe this is crazy, but worse than bigger deficits? What are your thoughts on the ideas in the presentation?