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talkpoliticsRecovery in peril as double-dip threatens
Some excerpts:
"I do not believe we're heading for a whole world double-dip recession, but parts of the world certainly are," he said. "Much of Europe is and the UK has a one-in-three chance [of doing so]."
...
"Government spending cuts "will affect employment in US markets, exacerbating an unemployment rate already above 9 per cent. That will affect industrial companies [and lead to] less production, less export and less money coming in".
...
"The consequences for world trade could be huge. Trade volumes have surged back to above pre-financial crisis levels since bottoming out in 2009, according to an Organisation for Economic Cooperation and Development index, but the health of global commerce is dependent largely on demand from hard-pressed consumers in the US and Europe."
...
"Weak demand from the States is obviously negative, but intra-Asia, Middle East and Africa demand has been solid and that's making up the difference for the time being."
Time to Say It: Double Dip Recession May Be Happening
Some excerpts:
"If this is the beginning of a new double dip, it will have two significant things in common with the dual recessions of 1980 and 1981-82. In each case the first recession was caused in large part by a sudden withdrawal of credit from the economy. The recovery came when credit conditions recovered."
...
"And in each case the second recession began at a time when the usual government policies to fight economic weakness were deemed unavailable. Then, the need to fight inflation ruled out an easier monetary policy. Now, the perceived need to reduce government spending rules out a more accommodating fiscal policy."
The writing is on the wall. There are strong indications pointing to a return to crisis. S&P-500 plunged by 9% in a fortnight, and despite the drop of prices for the US government borrowing after the "Deal" was reached, there are several moments that shouldn't be overlooked. The "Deal" didn't improve the financial framework at all. It only partially dealt with some of the most pressing symptoms of the disease. Equities are still plunging. The expectations for inflation are rising. The expectations for the yields from the Treasuries were downgraded severely just within a couple of days. Commodities are dropping fast (oil), which causes concerns in OPEC. The dollar is climbing up as well, which will put a further blow on exports.
You wonder why is this all happening, why now? Many reasons. The post-crisis growth was minute, and it stopped before this year was halved. Now what the US government considers the best option is to just tighten the belts. Meanwhile, Europe is hanging over a cliff with several ulcers gaping (Greece) while most of its politicians are spending nice time on holidays. Confidence in the markets is suddenly falling again. It's all like a self-fueling spiral that leads straight back to where we were in 2009.
To add to that, basically the US has committed a seppuku with the "Deal" which will echo throughout both sides of the Atlantic in the next months, possibly affecting East Asia as well (in fact that has started yesterday), but much less the Middle East, Africa and least of all the emerging economies from the BRICS. Whether this will lead to some major shifts in the balance of power on the economic (and then the geopolitical) chessboard, is yet to be seen, but I'd say: Yes.
Some excerpts:
"I do not believe we're heading for a whole world double-dip recession, but parts of the world certainly are," he said. "Much of Europe is and the UK has a one-in-three chance [of doing so]."
...
"Government spending cuts "will affect employment in US markets, exacerbating an unemployment rate already above 9 per cent. That will affect industrial companies [and lead to] less production, less export and less money coming in".
...
"The consequences for world trade could be huge. Trade volumes have surged back to above pre-financial crisis levels since bottoming out in 2009, according to an Organisation for Economic Cooperation and Development index, but the health of global commerce is dependent largely on demand from hard-pressed consumers in the US and Europe."
...
"Weak demand from the States is obviously negative, but intra-Asia, Middle East and Africa demand has been solid and that's making up the difference for the time being."
Time to Say It: Double Dip Recession May Be Happening
Some excerpts:
"If this is the beginning of a new double dip, it will have two significant things in common with the dual recessions of 1980 and 1981-82. In each case the first recession was caused in large part by a sudden withdrawal of credit from the economy. The recovery came when credit conditions recovered."
...
"And in each case the second recession began at a time when the usual government policies to fight economic weakness were deemed unavailable. Then, the need to fight inflation ruled out an easier monetary policy. Now, the perceived need to reduce government spending rules out a more accommodating fiscal policy."
The writing is on the wall. There are strong indications pointing to a return to crisis. S&P-500 plunged by 9% in a fortnight, and despite the drop of prices for the US government borrowing after the "Deal" was reached, there are several moments that shouldn't be overlooked. The "Deal" didn't improve the financial framework at all. It only partially dealt with some of the most pressing symptoms of the disease. Equities are still plunging. The expectations for inflation are rising. The expectations for the yields from the Treasuries were downgraded severely just within a couple of days. Commodities are dropping fast (oil), which causes concerns in OPEC. The dollar is climbing up as well, which will put a further blow on exports.
You wonder why is this all happening, why now? Many reasons. The post-crisis growth was minute, and it stopped before this year was halved. Now what the US government considers the best option is to just tighten the belts. Meanwhile, Europe is hanging over a cliff with several ulcers gaping (Greece) while most of its politicians are spending nice time on holidays. Confidence in the markets is suddenly falling again. It's all like a self-fueling spiral that leads straight back to where we were in 2009.
To add to that, basically the US has committed a seppuku with the "Deal" which will echo throughout both sides of the Atlantic in the next months, possibly affecting East Asia as well (in fact that has started yesterday), but much less the Middle East, Africa and least of all the emerging economies from the BRICS. Whether this will lead to some major shifts in the balance of power on the economic (and then the geopolitical) chessboard, is yet to be seen, but I'd say: Yes.
Re: Krugman predicted all of this
Date: 5/8/11 13:46 (UTC)Putting forth an argument then ending it with "or maybe not" doesn't get you the ability to claim accuracy when "maybe not" occurs. He did the same thing with his "Great" NASDAQ prediction. Talked about how there was no tech bubble and how the future was not in big businesses like Apple and IBM but in plucky young companies. To which he ended it with "or maybe not" which led to him apparently calling the tech bubble.
All he did in the selected portion you cited was restate his argument about the Great Depression while still glossing over how the austerity slide was expected because FDRs critics were rift that the private sector still had not recovered. Keeping in mind the whole point of he New Deal was to get the private sector recovered.
I wish he'd let military Keynesianism just die already. It's a tired canard that leads us to the military budget we have today.