Posted on 06/06/2010 8:50:18 AM PDT by blam
Paul Krugman: Lost Decade, Here We Come
Henry Blodget
Jun. 6, 2010, 9:49 AM
Paul Krugman continues to argue that a return to "austerity"--an effort by world governments to reduce the massive deficits that have followed the financial crisis--will bury the global economy.
Just as bad, Krugman says, austerity will cause deficits and debt to balloon even more, because tax receipts will plummet.
Thus, Krugman views the G20's new focus on reducing deficits as a disaster:
The deficit hawks have taken over the G20:
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.
These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched”.
It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US.
But don’t we need to worry about government debt? Yes — but slashing spending while the economy is still deeply depressed is both an extremely costly and quite ineffective way to reduce future debt. Costly, because it depresses the economy further; ineffective, because by depressing the economy, fiscal contraction now reduces tax receipts...
[snip]
In short, we think the pain is unavoidable. It's just a question of what form it comes in and when.
[snip]
(Excerpt) Read more at businessinsider.com ...
Primarily what the "Stimulus" spending does is paper over the budget cracks for State and Local Governments with Fed deficit spending so the locals don't have to make any though choices to get their budgets in line with their shrinking tax base. The "Stimulus" spending going on now has almost no is impact on future economic activity! It merely prevents the economy from fixing itself by delaying the day of reckoning for local and state Governments. All they are doing is prolonging the pain
I just hope it’s a K-wave and not the dreaded K-winter.
Krugman is a pathetic Dum shill masquerading as a columnist.
The man is an idiot, even in his choice of words. “Lost decade” is the standard Englishing of the Japanese description of the period of stagnation in the Japanese economy created by attempting to drag the economy out of a recession with exactly the sort of Keynsian “stimulus” policies Obama is pursuing and Krugman is defending. If there was any question about the validity of the analysis that showed that the New Deal prolonged the Great Depression, the Japanese Lost Decade should have put it to rest.
10 States Where An Absurd Percentage Of The Population Works For The Government
Actually Kennedy and Reagan proved that cutting tax rates, actually increases revenue.
But for Democrats, taxes are not about revenue collection, it’s about control.
Agreed. Classic bait and switch. Republicans had better be careful what they wish for. Big gains, and possible control of either the House or Senate, are exactly what the Dems and the current Administration want. For them it does two things: One; When collapse comes, and the riots start, they will be absolved of liability (with the help of the MSM, of course). Two; they simply move into private sector and non-profit positions, that garner them three times their current wages.
Yes, as Kennedy once proclaimed: “a rising tide lifts all boats”. This administration is trying its best to sink the boats.
"My favourite methods won't work, therefore no-one else's will." Not-Invented-Here syndrome.
An economy must produce at least as much as it consumes over time or it will collapse . You do no need a Nobel Prize in economics to understand this.
I just know the general outlines of Kondratieff. If it’s nuclear winter we are really screwed but one thing we over the 1930s is much high level of labor saving technology. This knowledge cannot be destroyed. Only problem is most of it runs on oil and other petro-fuels. For energy independence we need to be using more coal and natural gas not faggy windmills and solar panels unless wind/solar can justify themselves on a cost/benefit basis without getting tax subsides to deploy them.
These greenies are moochers who want the USG subsidizing their schemes
Yep! And, increasing its intensity. The longer this snowballs, the worse it will get.
If you blow up the debt and waste trillions of dollars when times are good, then you won’t have it to spend when times are bad. Paul doesn’t get that.
in Wyoming's defense, i think it's more a function of a sparse population that still requires the same number of govt offices no matter the population vs more than avg govt workers...
Hey Paul, they were in the red before this crisis.
I could have agreed with you if the fact that they were already deep in debt before this crisis. Let’s face it, we had a Government Spending Bubble.
You're probably correct...there's only 544,270 people in Wyoming.
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