Paul Krugman: The Political Economy of the Lesser Depression

[amborin]

The Political Economy of the Lesser Depression

Everyone in the forecasting business is scrambling to mark down both their estimates of second-quarter growth and their forecasts for later in the year.......



At this point, GS is predicting an unemployment rate of 8 3/4 percent at the end of 2012 — five years after the Great Recession began.

snip

So, terrible growth prospects; low inflation; oh, and low interest rates, with no sign of the bond vigilantes. Ordinary macroeconomic analysis tells you very clearly what we should be doing: fiscal expansion and monetary expansion by any means we can manage......

And what are we talking about in policy terms? Spending cuts and an end to monetary expansion.

snip

.........But the susceptibility of politicians — including, alas, the president — and pundits to these wrong ideas demands a deeper explanation.

Mike Konczal ratchets up my rentier argument, arguing that what we’re seeing is:

"a wide refocusing of the mechanisms of our society towards the crucial
obsession of oligarchs: wealth and income defense."

snip

But the upshot is terrible: more and more, this really does look like the Lesser Depression, a prolonged era of disastrous economic performance. And it’s entirely gratuitous.

http://krugman.blogs.nytimes.com/2011/07/16/the-political-economy-of-the-lesser-depression/

[MannyGoldstein]

"Make no mistake: slashing government spending is job #1

All you little people, enjoy your peas and catfood. I've got bankers to keep happy."

[Blecht]

1. Krugman and the few of us who read what he writes

We are modern-day Cassandras helplessly watching the destruction of our country (and the world) take place.

[Riftaxe]

2. Free trade advocates like Krugman

Helped get us into this mess in the first place.

[Blecht]

3. No argument here with that

But he's been consistently right for the past two-plus years.

[pscot]

4. This being the internet and all

Got a link?

[pscot]

5. Never mind. I googled.