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In his latest book, The Price of Civilization: Reawakening American Virtue and Prosperity , Jeffrey Sachs calls on Americans to recognize that we are connected to other countries' problems in direct ways, and that our behavior as consumers and citizens have a significant impact on global development. And he offers up his prescription for working toward a cure to the global economic crisis. He discussed the state of the global economy, and specifically the euro-zone debt crisis, in an interview with Parminder Bahra of the Wall Street Journal:

In the period before the global economic crisis of 2008, Nouriel Roubini was tagged "Dr. Doom" by many media outlets. The label was often dismissive, but it became more of a badge of honor after crisis hit. Roubini has remained vigilant about the vulnerability of the financial markets. His concern now is a global depression. In order to avoid depression, Roubini says there must me a multi-national approach. While austerity measures in many countries are necessary, he argues that other nations must postpone austerity in order to inject stimulus into the global economy. Writing at Project Syndicate , Roubini outlines several other steps: Second, while monetary policy has limited impact when the problems are excessive debt and insolvency rather than illiquidity, credit easing, rather than just quantitative easing, can be helpful. The European Central Bank should reverse its mistaken decision to hike interest rates. More monetary and credit easing is also required for the US Federal Reserve, the Bank of Japan, the Bank of England, and the Swiss National Bank. Inflation will soon be the last problem that central banks will fear, as renewed slack in goods, labor, real estate, and commodity markets feeds disinflationary pressures. Third, to restore credit growth, eurozone banks and banking systems that are under-capitalized should be strengthened with public financing in a European Union-wide program. To avoid an additional credit crunch as banks deleverage, banks should be given some short-term forbearance on capital and liquidity requirements. Also, since the US and EU financial systems remain unlikely to provide credit to small and medium-size enterprises, direct government provision of credit to solvent but illiquid SMEs is essential. Fourth, large-scale liquidity provision for solvent governments is necessary to avoid a spike in spreads and loss of market access that would turn illiquidity into insolvency. Even with policy changes, it takes time for governments to restore their credibility. Until then, markets will keep pressure on sovereign spreads, making a self-fulfilling crisis likely. Agree or disagree with Roubini, by proposing specific steps, he does allow for a meaningful discussion. Two big questions raised by his proposals are 1) is a coordinated global policy possible in today's political climate, and 2) if so, then how might it come about? Read How to Prevent a Depression here .

Bloomberg's Hans Nichols reports that Roger Altman is being considered to replace Lawrence Summers as the director of the President's National Economic Council . We remember Altman as Deputy Secretary of the Treasury during the first two years of the Clinton Administration. Now he is chairman of Evercore Partners , the investment banking boutique that he founded. As we were looking for more information on Altman, we came across this interview with Charlie Rose from July 2009. In this excerpt, Altman is discussing the deficit and some of the other key issues he will have to consider if he does end up as a key adviser to President Obama: Watch the full interview here .

The Federal Open Market Committee is set to meet tomorrow to discuss the state of the US economy and ways to push recovery. The Financial Times is now reporting that the Fed will "downgrade its assessment" of the economy . So that opens up questions of what tools the Fed may use to stimulate the sluggish recovery. Will the Fed be able to inject additional fiscal stimulus measures? Is additional quantitative easing a possibility? The University of Oregon's Tim Duy is expecting a "small change." Bottom Line: The incoming data appears largely consistent with the Fed's priors - especially expectations of glacially slow improvement in the labor market. Yet the probability of any upside risk to the forecast have diminished markedly. The V-shaped recovery has not emerged. The elimination of that upside risk argues for additional easing, but the Fed appears hesitant to do more. Uncertainty about the effectiveness of additional easing argues against more action, especially given relatively quiescent financial markets and positive, albeit lackluster, growth. Moreover, any additional action now is essentially a promise to do more later, even if growth remains along its current trajectory. All of these points argue against additional easing tomorrow, and that remains my baseline scenario. The case becomes muddied by internal, staff level pressure to do more now, combined with rising expectations of imminent easing given the steady flow of leaks to the press. This opens the possibility of a small policy adjustment that eliminates that passive reduction of the balance sheet. Any more is off the table. Read Tim Duy's Fed Watch here .

David Rubenstein , Co-founder and Managing Director of The Carlyle Group , told Charlie Rose that we need to be satisfied with a relatively flat economy through at least the rest of the year. With unemployment so high, and Congress showing little will to do anything significant before fall elections, he is expecting things to stay pretty much the same. As for the long term prospects of the US economy, Rubenstein seems to think the days of 5-6% growth—at least for extended periods—are a thing of the past. Here is an excerpt of the interview: Watch the full interview here .

Greg Mankiw weighs in on the Obama administration's economic stimulus measures in the Summer 2010 issue of National Affairs . And Mankiw cautions us to look at the macroeconomist models used to determine the state of the economy back at the beginning of 2009, rather than just the measures used to fight economic crisis. Mankiw writes that the Obama administration saw "decline in aggregate demand" as the key problem. Mankiw: So, inspired by the view that fiscal policy can prop up aggregate demand, Obama's advisors (and their congressional allies) began to design a stimulus plan heavy on direct government spending. A few days before President Obama's inauguration, his economic advisors released a document titled "The Job Impact of the American Recovery and Reinvestment Plan," in which they detailed some of their economic assumptions. They determined that the "government-purchases multiplier" — that is, the multiplier for direct spending — would be 1.57, while the tax-cut multiplier would be 0.99. In other words, every dollar spent by the government would yield $1.57 in aggregate demand, while every dollar in reduced taxes would yield only 99 cents in increased demand. And because 1.57 is larger than 0.99, the Obama team concluded it was better to increase spending than to cut taxes. Obama and his advisors arrived at these numbers through a standard macroeconometric model of the sort economists have been using for years. Such models take various past relationships among economic variables (inflation and unemployment, for instance) and extrapolate them into the future. In essence, the economy is modeled as a system of equations, each describing how one variable responds to many others. University of Chicago economist (and Nobel laureate) Robert Lucas famously criticized these models for lacking an appreciation of people's changing expectations; many economists, however, still find such models valuable, and have continued to employ them for forecasting and policy analysis. The question for economists now is whether the administration's assumptions, and the model based on them, were correct. After all, if we could be sure their model was right, we would know what to conclude when their stimulus plan was followed by 10% unemployment: The patient was sicker than they thought, and unemployment would surely have been higher still if not for the stimulus. (Indeed, since Obama's advisors do believe their model was right, this is the conclusion they have reached.) The trouble is, we have no way of knowing for sure if the model was in fact correct. To react to a model's failure to predict events accurately by insisting that the model was nonetheless right — as Obama's economic advisors have done — is hardly the most obvious course. Careful economists should instead respond with humility. When their predictions fail — as they often do — they should not dig in their heels, but should instead be willing to go back to their starting assumptions and question their validity. Read Crisis Economics here .

Japan's central bank started to pursue a policy of quantitative easing in 2001. It moved off of the "zero-interest rate" policy after 5 years, but then the global economic crisis hit, and rates went down again. Now, it is continuing to push monetary policy as a means of fighting deflation in the world's second largest economy. Hiroko Tabuchi has the story in today's New York Times : Central banks around the world have in recent weeks mulled rolling back stimulus steps put in place during the global economic crisis, gradually shrinking excess liquidity in their banking systems. The U.S. Federal Reserve said Tuesday it will let a mortgage-security purchase program expire at the end of March. But in Japan — where prices have remained sluggish amid a lackluster recovery from its worst recession since World War II — the government has urged monetary authorities to further stimulate the economy by flooding the banking sector with cash. Japan is also leaning on monetary policy because its public debt load, the highest among industrialized countries, makes it reluctant to spend more money on public works projects and other government stimulus programs. Read Japan Eases Monetary Policy to Fight Deflation here .