Paul Krugman: Is Our Economy Healing?

[babylonsister]

http://www.nytimes.com/2012/01/23/opinion/krugman-is-our-economy-healing.html?_r=1

Is Our Economy Healing?
By PAUL KRUGMAN
Published: January 22, 2012


How goes the state of the union? Well, the state of the economy remains terrible. Three years after President Obama’s inauguration and two and a half years since the official end of the recession, unemployment remains painfully high.

But there are reasons to think that we’re finally on the (slow) road to better times. And we wouldn’t be on that road if Mr. Obama had given in to Republican demands that he slash spending, or the Federal Reserve had given in to Republican demands that it tighten money.

Why am I letting a bit of optimism break through the clouds? Recent economic data have been a bit better, but we’ve already had several false dawns on that front. More important, there’s evidence that the two great problems at the root of our slump — the housing bust and excessive private debt — are finally easing.

snip//

Back to the U.S. situation: my guarded optimism should not be taken as a statement that all is well. We have already suffered enormous, unnecessary damage because of an inadequate response to the slump. We have failed to provide significant mortgage relief, which could have moved us much more quickly to lower debt. And even if my hoped-for virtuous circle is getting under way, it will be years before we get to anything resembling full employment.

But things could have been worse; they would have been worse if we had followed the policies demanded by Mr. Obama’s opponents. For as I said at the beginning, Republicans have been demanding that the Fed stop trying to bring down interest rates and that federal spending be slashed immediately — which amounts to demanding that we emulate Europe’s failure.

And if this year’s election brings the wrong ideology to power, America’s nascent recovery might well be snuffed out.

[Demeter]

1. Pardon my skepticism

There cannot be improvement until the rule of law returns. All that is registering is that most of the active lawbreaking is going on in Europe, and the US crimes are being covered up and over.

[ProSense]

2. Looks

like we posted around the same time, I'll delete my post.

Still, it doesn't appear that a possible recovery is all that interesting.

There are signs to support Krugman's claim that the economy is improving.

The Rapid Economic Recovery Republicans Are Praying Against
http://www.democraticunderground.com/1002141773

Auto-industry rescue paying dividends
http://www.democraticunderground.com/1002186993

EPI: A solid step in the right direction for the labor market
http://www.democraticunderground.com/1002137284

Some Bullish Housing Forecasts for 2012
http://www.calculatedriskblog.com/2012/01/some-bullish-housing-forecasts-for-2012.html

[hfojvt]

3. rarely is the question asked

Is our voters learning?

[ProSense]

4. Wow

Krugman, done!

[mikekohr]

8. snap

[hfojvt]

9. not so much

but the last line from the snip "And if this year’s election brings the wrong ideology to power, America’s nascent recovery might well be snuffed out."

Made me wanna tell the voters "learn, goddammit" (before you kill us all)

[mikekohr]

11. Chess?

President Obama been schooling the Republicans in three dimensional chess for the last three years. He'll checkmate them in November.


Obama and 25 in '12

[redqueen]

21. Can we expect republican voters to learn?

Or is this aimed more at the splintering left?

Or are we all supposed to learn we should vote third party?

[hfojvt]

27. Well, I was a teen age

Republucan voter, so I would think at least SOME republican voters can learn. I've also voted fifth party (when Perot was the 3rd party) without either ill effects, nor with any good effects.

I think the whole third party salvation is quite ridiculous. Those who hope for some sort of 3rd party to sweep progressives into power. If the progressive cannot win the Democratic primary then they are not gonna win the general election. From where I sit though, we do not even have a 2nd party. Right now, for four Congressional seats in Kansas, I have no idea who is gonna run for those offices in the Democratic Party. Even the Democratic Party does not seem to have candidates. So where are these 3rd party candidates gonna come from? If this election is like the last one, of 150 legislative races, Kansas Democrats will only have candidates for about 120 of them. That is even true locally. My county, where I happen to be treasurer of the Democratic Party, has three legislative districts (actually four if you include the section of Basehor which is in the 39th, but being in the south of the county, I don't hear as a much about them. Novak may be running (again, for the 3rd time)).

Anyway, of those 3 districts, right now we only have a candidate in the 40th - the incumbent. In the 42nd for years the Republican incumbent ran unopposed. Worse yet though, in the 2010 elections, the Democrats of South Dakota did not even have a candidate for the US Senate! So I don't see a viable 3rd party springing up like a weed. That progressive 3rd party candidate should be running in the Democratic primary.

[redqueen]

29. Thanks,

I wasn't quite sure where you were coming from based on your previous post.

I agree with you completely.

[Johonny]

32. They do learn

usually only when their ideas come back to bite them. Cutting those lazy worker benefits seems great until you're that lazy worker, national health care sucks until Republicans want to cut your medicare etc...

Some Republicans finally get it and never vote Republican again, some get it issue to issue and never fully see the big picture. Of course some people never get it. They will search over and over for the "real" conservative and the "true" Republican.

[surfdog]

5. Krugman is an idiot

He claims were in a recovery at the same time he claims we have slipped into a depression

What a hack

[dawg]

10. And what are you're credentials?

Got one of these?

[surfdog]

15. My credentials?

It's called reality

Paul thinks we can be in the depression while we have positive GDP and job numbers

We can't even be in a recession with positive GDP and job numbers much less a depression

the guys a freaking idiot

[dawg]

19. Maybe it's you.

There is no consensus definition of depresssion, but it's very clear from history that there were many years of positive GDP growth during the period of time we now refer to as the Great Depression. The key point was that the economy was significantly below potential for a very long period of time.

It's fine to disagree with Krugman. He's human and can certainly be wrong.

But calling him a hack or an idiot is more of an indication that you might be missing something.

[surfdog]

23. And maybe it's you

There is a definition for recession and we are miles upon miles away from being in a recession to claim we are in a depression is absurd

If we come nowhere near fitting the description for a recession then how could we possibly be in a depression

Even my dog understands this

[dawg]

24. I'm not the one calling a nobel prize winning economist a hack.

Whenever I find myself in disagreement with someone far more experienced and educated than I, my first response is to consider that he or she may be aware of something that I am not. I try to read more and understand more in order to at least be able to figure out why it is they came to such a different conclusion than me.

I learn stuff that way. I don't always change my mind, but I do at least come to an understanding of why the other person disagrees with me.

But to just call them a hack and an idiot, when clearly they are immensely better informed on the subject than you, is poor thinking.

I have already explained to you that positive GDP growth can exist during a period of overall depression. These periods would not meet your textbook definition of recession either, but I think it is clear that the Great Depression did indeed exist and did not end until much later than the first year of positive GDP growth.

Some questions:

Why are you so mad at Krugman?
What economist do you think has done a better job of modeling our current situation?
What is so offensive about the term "depression"? No one is saying this thing is the same as the Great Depression but it has obviously been something far worse than any normal "recession" I have lived through in my lifetime.

[surfdog]

30. Disagreement ?

Krugman has left reality

The economy in no way fits the description for a recession so how could it possibly fit the description for a depression ?

Maybe you need to look up the definition for the word recession

Krugman simply does not understand the word recession and has decided to rewrite the definition for the word in order to make his argument

Do you understand yet? You cannot hold an opinion on the definition of the word recession we all have to agree on the definition

Krugman wants us to believe that a depression can have positive GDP and job growth which is simply not the case

[dawg]

31. "Krugman wants us to believe that a depression can have positive GDP and job growth .."

You haven't read a single thing I've written. I even drew you a picture.

[surfdog]

33. Oh please

You said I had a disagreement with Paul Krugman

I was letting you know that it's Paul Krugman that disagrees with reality

the definition of a recession cannot be changed not even for that idiot

A recession cannot have positive GDP growth and job growth

which means a depression certainly cannot show positive growth let's be honest now

you are defending a lie

[dawg]

34. Again, I have to ask "Why the anger towards Krugman?"

First, a few facts.

1. There is no standard definition of an economic depression. You can have positive GDP growth in a depression. I showed you that.

2. Krugman isn't saying the economy is in a recession by textbook definitions right now. (And he knows what these terms mean. )

3. It is very possible for the economy to go through expansionary periods within the context of an overall depression. Only history will tell us whether that is true of the current economy or not, but it is by no means "idiotic" or indicative of a "hack" to think this might be the case.

4. No one is saying this is as bad as the Great Depression. The term "lesser depression" is the one I see most often. Krugman is not the originator of this term and is far from being the only economist using it.

So, again, I ask you, "Whose view of the economy has been more accurate than Krugman's?" Do you like Brad DeLong, Christy Roemer, or Mark Thoma? Most of those are in agreement with Paul. Are you more of a conservative? Do you like Mankiw ond Orzag? Or perhaps you're one of the Gold Bug Paulites? Are you an Austrian?

I just really want to know where you're coming from, and if there is any substance there. Is it just that you're just obsessivly caught up on the semantics of a textbook definition of recession, or perhaps you're just mad at Krugman because he said something *mean* about a politician you like. Either way, I'm curious.

[surfdog]

36. This is simple logic...

"1. There is no standard definition of an economic depression. You can have positive GDP growth in a depression."

Not true

There IS a definition of a recession , and if the current economy doesn't meet the definition for recession then it's impossible for it to meet the definition for a depression

A recession cannot contain positive GDP growth , implying that a depression can contain positive GDP growth is simply not accurate

There is no way for a depression to contain month upon month of positive GDP growth and job growth it simply cannot happen unless you change the terms for a recession

Your argument that a depression can contain positive GDP growth is absurd

[dawg]

37. Was FDR President during the Great Depression?

[surfdog]

38. Just stop already

You keep rejecting the definition of the word recession

If a recession requires two back-to-back quarters of negative GDP growth and a depression is worse than a recession, well you do the math

Claiming a depression can contain months upon months of positive GDP growth is completely absurd

[Zalatix]

12. I disagree with Krugman on this, but he is not an idiot.

[surfdog]

20. Of course he is an idiot

He thinks a depression can contain months upon months of positive GDP growth , and job growth

This makes him a bitter fool

[cthulu2016]

25. You better tell FDR about this!

Roosevelt was so deluded that he thought he was president during a depression, but by 3/33 when he became president the depression was pretty much over.

http://www.economics-charts.com/gdp/gdp-1929-2004.html

[dawg]

26. Here.

By your definition, the Great Depression ended in 1932 and anyone who thinks otherwise is an idiot.

[Zalatix]

28. Yup, it's called a sucker's rally.

We're in the middle of it...

[Better Believe It]

35. The GDP grew in 1933 and average yearly growth was over 10% from 1934-36.

What's the GDP been since the "Great Recession" ended in 2009?

[Broderick]

6. Economy won't continue to improve

if these gas prices continue to creep up and up. Unfortunately it hurts those hurting the most, the most.

[Major Nikon]

7. Don't forget that the Republicans created this mess in the first place

Last edited Mon Jan 23, 2012, 12:13 PM - Edit history (1)

Remind every wingnut you know about this at every given opportunity.

The Gramm–Leach–Bliley Act was ramrodded by the GOP and was directly responsible for the Bush Great Recession. Most Democrats were against it and some only voted for it when the most dastardly of anti-privacy provisions were scaled back. The Democrats warned everyone exactly what the result would be.

http://www.c-spanvideo.org/program/HouseSession1926/start/10927/stop/11129

Then when the financial meltdown happened as predicted, Bush did too little, too late to keep the economy from going off the cliff.

[ProSense]

13. Exactly. n/t

[Scurrilous]

14. K & R

[DCBob]

16. Wow, Is this the same Krugman who has been insisting we are heading for depression??

I guess the recovery is for real now that he's on board. Cheers!

[eridani]

17. Of course the economy is improving. The question is, what is it improving TO?

The "new normal" that seems to be increasingly acceptable for the comfortable is an ongoing disaster for the 48% of the population with ZERO discretionary income.

[renegade000]

18. oh Paul Krugman

under the bus you go. you give Obama and democrats faint praise occasionally, which is unforgivable!

[redqueen]

22. lol

[TheKentuckian]

39. Pure hyperbole, there is no need for absolute agreement for general respect.

Krugman is quite guarded and for good reason, the underlying structural faults have not been corrected nor have miscreants and villains been held to account, in fact they have largely been greatly enriched.

I'm not sure we even have a baseline anymore, the economy was garbage for most before the fall 08 meltdown, the real economy that operates on a sliver of the resources of the total economy has been in decline for a generation or more.

The overall growth isn't super significant if you factor in the resource constriction to the majority of the people. If you look at where the "growth" largely comes from, it is hard to believe in its substance because of the lack of value and too often profits derived from extraction.

Krugman is a bright guy but was once pretty much orthodox in the official state secular religion, being smart and liberal in mental bent, considers he could be wrong about some of the structural problems and in many ways hopes so. It would be soooo much easier if things mostly just cycle and self correct.