The Corner

Krauthammer’s Take

From Thursday night’s Fox News All-Stars:

On Thursday’s major stock market selloff:

All of us like to think this is all about Washington. This is not about Washington.

I think there are two factors here.

The less important of the two is the U.S. economy, which is slowing. We had very bad consumer spending. Added on to that, these terrible numbers of the revision of gross domestic product which showed that rather than growing at 2 percent, perhaps 3 percent, the first half of the year the economy expanded at 0.9 percent — which means it’s flat, which means the economy has completely stalled. The estimate is a one in three chance of a second recession. …

A worldwide slowdown is always reflected in the oil. If it anticipates a slowdown, it goes down. It’s down by 6 percent today. That is the first factor.

But the second one — and I think the more important one — is the panic in Europe over the status of Spain and Italy. This is not a Greece or Ireland, which is, you know, kindergarten. Italy is too big to bail. The eighth largest economy in the world.

The worst is what the prime minister [Berlusconi] did not tell us Wednesday. They thought he’d announce austerity measures. But he announced nothing and declared that the fundamentals are strong. And that, I think, set off a panic. This is Europe living 60 years over its head in the entitlement state, and it’s running out of money in a disastrous way. That was the number one factor.

On whether Obama has any weapons left to boost the economy:

I would disagree. I think if you’ve got $1 trillion sitting overseas that it’s staying overseas because if you bring it home it’s subject to double taxation. What you do is you give a holiday, a moratorium. … I think the reason that Obama doesn’t want to do it is that when he sees $1 trillion over there is untaxed, he gets physical pain as a result.

Second suggestion — how about a one-year moratorium on regulations? Obama imagines that acting on the economy is always creating a program, spending money, infrastructure, and all of this stuff. How about undoing the foot he’s had on the neck of this economy? The NLRB, the EPA, shutting down our drilling, shale, and all these other resources — try to cull, cleanse. A year of moratorium, roll back some of that, and you’ll see, at least in energy, a real spurt in economic growth.

NRO Staff — Members of the National Review Online editorial and operational teams are included under the umbrella “NR Staff.”

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