“The introduction of the sequester — the automatic across the board spending cuts that will kick in starting today — is the first real fiscal tightening that the US has engaged in since the crisis ended.
There’s a widespread feeling that it’s premature and going to be harmful to the economy, which remains mired in weak growth and unemployment that’s too thigh.
This has ominous parallels to Japan, which also saw several bouts of premature tightening (fiscal and monetary) during its long slump.
And not only that, the tightening (and then subsequent loosening) frequently coincided with downturns in the market….”
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