Thousands of the world’s business and political leaders are all heading to Davos, Switzerland—the home of Thomas Mann's fictional sanatorium—for this year’s five-day World Economic Forum. The euro crisis will be a dominant theme of the conference and Angela Merkel will serve as the keynote speaker. The conference comes as public confidence in world leaders' ability to fix the economic crisis hits a new low.
Although Mitt Romney won the Iowa caucus and the New Hampshire primary, and he is the runaway favorite in the polls, his image has taken a severe beating lately. His economic credentials are the foundation of his campaign, but it has become embarrassingly easy to portray the front-runner as someone who doesn't understand the economic pain many Americans are suffering right now. Yesterday, the Obama campaign's dirt pile on its likely general-election opponent grew substantially when Romney revealed his tax rate and made another unfortunately worded statement on his wealth.
The coming week is shaping up to feature a hostile fight between tech companies and content producers as the Stop Online Piracy Act (SOPA) and PROTECT-IP bills are debated in Congress. Reddit and Wikipedia have announced their intention to go dark for 12 hours on Wednesday to protest the bills, and rumors that Google, Facebook, and Twitter might join in have circulated.
In the past few weeks, the good economic news pouring in has kept newspaper business sections buoyant, but the celebrations may be premature. One of the biggest problems barring a quick comeback for the economy is inadequate aggregate demand—without demand, we can't produce more goods and can't hire more people. The Treasury estimates that the gap between actual and potential output is over 7 percent—that's equal to $1 trillion worth of goods and services. The U.S. has a considerable 12.1 million jobs gap as well, which won't close until 2024 if we keep adding 200,000 new jobs per month, the pace set in December 2011.