Second Stimulus Needed to Avoid Lost Decade: Krugman

CNBC ^ | Augly 10, 2009 | No Author

[Lazamataz]

The world economy needs a second stimulus if it is to avoid the fate of Japan in the 1990s when the country was stuck with years of sluggish growth, Nobel laureate and professor of economics Paul Krugman told CNBC Monday.

"The good news is that it does not look like the 2nd great depression. For a few months it did," Krugman said.

All indicators now point to the fact that the plunge has stopped, as jobs in the US are lost at a smaller pace and manufacturing and services seem to be stabilizing worldwide, he added.

But the sources of future growth are hard to pinpoint as the financial crisis has left the world with excess capacity and the possibility of high unemployment everywhere, according to Krugman.

"Right now I think the world as a whole kind of looks like Japan in the early 90s. Not a catastrophe, but we really don't know how we get serious growth going," he said. "Actually the slump globally has been much worse than anything Japan had during that lost decade."

More stimulus money is key for a sustainable recovery as fears of inflation are overdone, Krugman told CNBC.

"We really should have a second stimulus, we should have more stuff," he said, dismissing fears of price rises as a result of too much cash in the system.

"I think that's an old line from the great depression, that crying 'fire, fire' amid Noah's flood. I mean, we have no signs of inflation on the horizon. There is nothing in there that would be inflationary."

"You have to understand that putting money in the system, it mostly just sits there. It's quite easy to pull it out again if inflation starts to loom," he said.

However, the risk of a second round of the crisis in the medium run is high as a real revamp of the financial system has not happened, according to Krugman.

"At this point the prospects for major overhaul seem to be receding…because of the opposition in congress, because the industry - banks are profitable again, they want everybody to just go away," he said.

"The political will may not be there to do this. And that means that we may well be prepared for another round, another crisis some years down the pipe before we're actually prepared to change things," Krugman warned.

[Lazamataz]

Krugman: "Second Stimulus Needed to Avoid Lost Decade"

Krugman misspelled "Chance To Steal More Money From America And Socialize Rest Of The Economy"

Hope That Helps.

[SonOfDarkSkies]

According to Glenn Beck, the U.S. has spent only $70b so far of its 700b+ stimulus.

[FromLori]

LOONEY LEFT

http://www.freedomsphoenix.com/News/055250-2009-08-09-krugman-says-bernanke-should-be-reappointed-to-fed-update1.htm

[Flintlock]

Duh!
After that 1st “stimulus” worked so well........
Howsabout more jobs thru LOWER TAXES???

(Oops—that would mean they don’t control EVERYTHING, wouldn’t it?)

[ETL]

From the website of the Communist Party, USA
July 1, 2009...

Change is Here, Change is Coming

Sam Webb, National Chair, Communist Party, USA:

Let me begin with a simple observation: If the last 30 years were an era of reaction, then the coming decade could turn into an era of reform, even radical reform. Six months into the Obama presidency, I would say without hesitation that the landscape, atmosphere, conversation, and agenda have strikingly changed compared to the previous eight years.

In this legislative session, we can envision winning a Medicare-like public option and then going further in the years ahead.

We can visualize passing tough regulatory reforms on the financial industry, which brought the economy to ruin.

We can imagine the troops coming home from Iraq and Afghanistan while U.S. representatives participate in a regional process that brings peace and stability to the entire region.

In the current political climate, the expansion of union rights becomes a real possibility.

Much the same can be said about winning a second stimulus bill, and we sure need one, given the still-rising rate, and likely long term persistence, of unemployment.

Isn’t it possible in the Obama era to create millions of green jobs in manufacturing and other sectors of the economy in tandem with an attack on global warming?

Can’t we envision taking new strides in the long journey for racial and gender equality in this new era, marked at its beginning by the election of the first African American to the presidency?

And isn’t the overhaul of the criminal justice and prison system – a system steeped in racism – no longer pie-in-the sky, but something that can be done in the foreseeable future?

All these things are within reach now!

http://www.cpusa.org/article/articleview/1054/1/27/
____________________________________________

"Barack Obama told supporters that
'change has come to America' as he
claimed victory in a historic presidential election."

http://www.cnn.com/2008/POLITICS/11/04/election.president/index.html

[SecondAmendment]

"Right now I think the world as a whole kind of looks like Japan in the early 90s. Not a catastrophe, but we really don't know how we get serious growth going," he said.

How about permanent, massive income and capital gains tax cuts along with a permanent repeal of the AMT ?

Now where is my Nobel Prize !!!!!

[Lazamataz]

According to Glenn Beck, the U.S. has spent only $70b so far of its 700b+ stimulus.

Holy CRAP! We've spent 70 billion of the money intended to form a United States Domestic Pacification force, equally funded as the military???

GET MORE MONEY, STAT!

[Bean Counter]

yah...Krugman sez we are all “environmental traitors” if we don’t buy into Cap and Trade too...

[mo]

Only a true liberal could seriously professed to be baffled by this issue....

[Tarpon]

The Joker's plan

Slavery by debt so large it can never be repaid

Shush everyone, play along.

[Doc Savage]

Can’t someone shut this liberal moron up!

[PGalt]

LOL! I see you were “shovel-ready” for Krugman’s BS. Thanks Laz.

[Cooter]

Japan pursued three major fiscal stimulus packages totaling 6 percent of GDP between August 1992 and September 1993. None worked.

[shineon]

[Reagan69]

Last I heard, 90% of the last “stimuless” hadn’t been distributed yet. I think the Dems are saving it for the 2010 election.

[autumnraine]

“All indicators now point to the fact that the plunge has stopped, as jobs in the US are lost at a smaller pace and manufacturing and services seem to be stabilizing worldwide, he added. “

What the??? 1/10th of a percent is ‘jobs in the US are lost at at a smaller pace’??

These people have enough optimism to start their own faith.

[KC_Conspirator]

The world economy needs a second stimulus if it is to avoid the fate of Japan in the 1990s when the country was stuck with years of sluggish growth, Nobel laureate and professor of economics Paul Krugman told CNBC Monday.

WTF? Japan had like 8 stimulus and they all freaking failed. Yet this BUFFOON from the NY Slimes suggests that we FOLLOW Japan's failures?

[Lazamataz]

WTF? Japan had like 8 stimulus and they all freaking failed. Yet this BUFFOON from the NY Slimes suggests that we FOLLOW Japan's failures?

No. This loathesome, hideous excrement of a man suggests we EXCEED Japan's failures.

[milwguy]

To take Krugman at his word we should therefore ‘stimulate’ the economy by giving cash to all.

To heck with cash for clunkers, how about cash for houses? Tear done 10% of housing in the country and watch what happens to property values of the 90% remaining. Not to mention all the illegals put back to work rebuilding the housing stock. All those new houses need ‘energy efficient’ appliances, solar panels, etc..

If only the economy was operated in a vacuum and the Chinese and others who own our debt were not scared to death that we are monetizing our debts away. In Krugman’s world, those concerns don’t exist.

We will soon be testing Von Mises theories on credit expansion................”There is no means of avoiding the final collapse
of a boom brought about by credit (debt) expansion.
The alternative is only whether the crisis should come sooner
as the result of a voluntary abandonment of further credit (debt) expansion,
or later as a final and total catastrophe of the currency system involved.” - Ludwig von Mises

[Brugmansian]

Geithner and Krugman believe Japan didn't spend enough.

Yet even the New York Times has reported average Japanese saw it as a political power grab by the ruling Liberal Democratic Party and a waste. Krugman also ignores something else: when Japan was in a "lost decade" because it hadn't spent, according to Krugman's theory, enough, Japan had a thriving export trade. We don't. We won't have a "lost decade" in which there is little growth. We'll have a country on the rocks.