Paul Krugman warns us. Is anybody listening in Congress?
An article appeared today written by Paul Krugman of the NY Times and recent Nobel Laureate. I have taken the liberty to select portions of his piece and copy them below. It is must reading.
Krugman: Staving off a depression
By Paul Krugman
"If we don't act swiftly and boldly," declared President-elect Barack Obama in his latest weekly address, "we could see a much deeper economic downturn that could lead to double-digit unemployment." If you ask me, he was understating the case.
... Banks aren't lending; businesses and consumers aren't spending. Let's not mince words: This looks an awful lot like the beginning of a second Great Depression.
...It turns out, however, that preventing depressions isn't that easy after all.
The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Obama's plans to rescue the economy. But these plans may turn out to be a hard sell.
News reports say that Democrats hope to pass an economic plan with broad bipartisan support. Good luck with that.
In reality, the political posturing has already started, with Republican leaders setting up roadblocks to stimulus legislation while posing as the champions of careful congressional deliberation — which is pretty rich considering their party's behavior over the past eight years.
Here's my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it's only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.
So this is our moment of truth. Will we in fact do what's necessary to prevent Great Depression II?
If you want the entire article from the San Jose California Mercury News, click here.
Krugman: Staving off a depression
By Paul Krugman
"If we don't act swiftly and boldly," declared President-elect Barack Obama in his latest weekly address, "we could see a much deeper economic downturn that could lead to double-digit unemployment." If you ask me, he was understating the case.
... Banks aren't lending; businesses and consumers aren't spending. Let's not mince words: This looks an awful lot like the beginning of a second Great Depression.
...It turns out, however, that preventing depressions isn't that easy after all.
The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Obama's plans to rescue the economy. But these plans may turn out to be a hard sell.
News reports say that Democrats hope to pass an economic plan with broad bipartisan support. Good luck with that.
In reality, the political posturing has already started, with Republican leaders setting up roadblocks to stimulus legislation while posing as the champions of careful congressional deliberation — which is pretty rich considering their party's behavior over the past eight years.
Here's my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it's only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.
So this is our moment of truth. Will we in fact do what's necessary to prevent Great Depression II?
If you want the entire article from the San Jose California Mercury News, click here.
Labels: banks, Barack Obama, Congress, Consumers, Democrats, Depression, must read, Nobel Laureate, NY Times, Paul Krugman, Republicans
posted by Charles Amico at 6:44 PM
0 Comments:
Post a Comment
<< Home