Krugman: The Lesser Depression

[tpsbmam]

But, even if it does, then what? The statement calls for sharp deficit reductions “in all countries except those under a programme” to take place “by 2013 at the latest.” Since those countries “under a programme” are being forced into drastic fiscal austerity, this amounts to a plan to have all of Europe slash spending at the same time. And there is nothing in the European data suggesting that the private sector will be ready to take up the slack in less than two years.

For those who know their 1930s history, this is all too familiar. If either of the current debt negotiations fails, we could be about to replay 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, we will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed.

Did I mention that the European Central Bank — although not, thankfully, the Federal Reserve — seems determined to make things even worse by raising interest rates?

There’s an old quotation, attributed to various people, that always comes to mind when I look at public policy: “You do not know, my son, with how little wisdom the world is governed.” Now that lack of wisdom is on full display, as policy elites on both sides of the Atlantic bungle the response to economic trauma, ignoring all the lessons of history. And the Lesser Depression goes on.

More at the NY Times.

I tell you, the more that comes out about the bullshit that's taking place in Washington, the more it scares the shit out of me!

[Warpy]

1. I'm more infuriated than frightened at this point

I really think there needs to be a bloodbath in 2012, get rid of as much conservative dead wood in both houses as we can.

I just hope people in the south and midwest are also paying attention to this stuff and are as angry as I am.

[ladjf]

2. From my perspective as a senior citizen, I've never seen this kind

of stupidity, ignorance and meanness in our Government. Not even close.