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Lost Decade Looming? (Nobel Laureate Paul Krugman is not optimistic but still hopeful)
New York Slimes ^ | 05/21/2010 | Paul Krugman, Honorable Nobel Laureate /s

Posted on 05/21/2010 6:47:18 AM PDT by SeekAndFind

Despite a chorus of voices claiming otherwise, we aren’t Greece. We are, however, looking more and more like Japan.

For the past few months, much commentary on the economy — some of it posing as reporting — has had one central theme: policy makers are doing too much. Governments need to stop spending, we’re told. Greece is held up as a cautionary tale, and every uptick in the interest rate on U.S. government bonds is treated as an indication that markets are turning on America over its deficits. Meanwhile, there are continual warnings that inflation is just around the corner, and that the Fed needs to pull back from its efforts to support the economy and get started on its “exit strategy,” tightening credit by selling off assets and raising interest rates.

And what about near-record unemployment, with long-term unemployment worse than at any time since the 1930s? What about the fact that the employment gains of the past few months, although welcome, have, so far, brought back fewer than 500,000 of the more than 8 million jobs lost in the wake of the financial crisis? Hey, worrying about the unemployed is just so 2009.

But the truth is that policy makers aren’t doing too much; they’re doing too little. Recent data don’t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events; Philosophy
KEYWORDS: debt; depression; japan; krugman; lostdecade; paulkrugman
Krugman concludes his piece with this parting words :

"In short, fear of imaginary threats has prevented any effective response to the real danger facing our economy.

Will the worst happen? Not necessarily. Maybe the economic measures already taken will end up doing the trick, jump-starting a self-sustaining recovery. Certainly, that’s what we’re all hoping. But hope is not a plan. "

1 posted on 05/21/2010 6:47:19 AM PDT by SeekAndFind
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To: SeekAndFind
"But hope is not a plan."

I hope we can get a change to the plan.

2 posted on 05/21/2010 6:48:28 AM PDT by Paladin2
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To: SeekAndFind

Does he realize that we would be lucky to have it as good as Japan? They at least saved. We, as a people, are spendthrifts.


3 posted on 05/21/2010 6:48:46 AM PDT by PghBaldy (Like the Ft Hood Killer, James Earl Ray was just stressed when he killed MLK Jr.)
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To: SeekAndFind

For a while, my tagline was “Paul Krugman is always wrong”. What a tool.


4 posted on 05/21/2010 6:48:51 AM PDT by jdsteel (CONGRESS: Take it again in twenty ten.)
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To: SeekAndFind

Paul Krugman (He won a Nobel Prize don’cha know) is full of hope, and change, and a bunch of brown stuff............


5 posted on 05/21/2010 6:54:55 AM PDT by Red Badger (When you see Jerusalem being surrounded by armies, you'll know that its desolation is NEAR. Luke 21)
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To: PghBaldy
We, as a people, are spendthrifts.

In the early 80's, Congress made sure we'd always be so. There used to be a $600 tax free interest limit on passbook savings accounts. They took that away, and now EVERY SINGLE PENNY of interest is taxable. No incentive to save...............If adjusted for inflation, it would be over $1200 now.............

6 posted on 05/21/2010 6:58:03 AM PDT by Red Badger (When you see Jerusalem being surrounded by armies, you'll know that its desolation is NEAR. Luke 21)
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To: SeekAndFind

What a bunch of double-talk gobbledygook. The only think I could pick out of this was “don’t worry, keep spending tax money”.


7 posted on 05/21/2010 7:05:38 AM PDT by rhombus
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To: SeekAndFind
Correction:

"We are, however, after having followed my badly mistaken advice to implement Keynesian Government spending, looking more and more like Japan."

8 posted on 05/21/2010 7:26:46 AM PDT by Uncle Miltie (0bummer calls opponents "Teabaggers". So we can call Kagan "Carpet Muncher." Right?)
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To: SeekAndFind

There goes Krugman, banging away on his one-note Keynsian piano.


9 posted on 05/21/2010 7:27:18 AM PDT by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
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To: SeekAndFind; ding_dong_daddy_from_dumas; stephenjohnbanker; DoughtyOne; genetic homophobe; ...
Friday Krugman laugh ping:

And what about near-record unemployment, with long-term unemployment worse than at any time since the 1930s? What about the fact that the employment gains of the past few months, although welcome, have, so far, brought back fewer than 500,000 of the more than 8 million jobs lost in the wake of the financial crisis? Hey, worrying about the unemployed is just so 2009. But the truth is that policy makers aren’t doing too much; they’re doing too little. Recent data don’t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth. Since then, however, rates have retraced that rise and then some. As of Thursday, the 10-year rate was below 3.3 percent. I wish I could say that falling interest rates reflect a surge of optimism about U.S. federal finances. What they actually reflect, however, is a surge of pessimism about the prospects for economic recovery, pessimism that has sent investors fleeing out of anything that looks risky — hence, the plunge in the stock market — into the perceived safety of U.S. government debt.... So what we should really be asking right now isn’t whether we’re about to turn into Greece. We should, instead, be asking what we’re doing to avoid turning Japanese. And the answer is, nothing. ..In short, fear of imaginary threats has prevented any effective response to the real danger facing our economy.

His argument is that we can run up endless debt because of deflation due to a lack of recovery. “Borrow more, spend more, print more”. He thinks Greece's only problem is that they cant devalue their own currency to scew their debtors. Otherwise they are a success to him.

10 posted on 05/21/2010 7:42:59 AM PDT by sickoflibs ( "It's not the taxes, the redistribution is the federal spending=tax delayed")
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To: Travis McGee

The stupidity of Krugman goes to the bone.


11 posted on 05/21/2010 7:47:09 AM PDT by stephenjohnbanker (Support our troops....and vote out the RINOS!)
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To: SeekAndFind

Paul Krugman,

FAKE Nobel Laureate


12 posted on 05/21/2010 8:15:29 AM PDT by DontTreadOnMe2009 (So stop treading on me already!)
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To: DontTreadOnMe2009

RE: FAKE Nobel Laureate

Oh, I can assure you it is genuine. The question then becomes what good is the genuine one ?


13 posted on 05/21/2010 8:16:55 AM PDT by SeekAndFind
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To: Red Badger

I did not know that. Good point.


14 posted on 05/22/2010 3:38:26 AM PDT by PghBaldy (Like the Ft Hood Killer, James Earl Ray was just stressed when he killed MLK Jr.)
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