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Paul Krugman: "We are now, I fear, in the early stages of a third depression... And this third...

  • Monday, June 28, 2010, 10:08 AM ET
    Paul Krugman: "We are now, I fear, in the early stages of a third depression... And this third depression will be primarily a failure of policy. Around the world - most recently at last weekend’s deeply discouraging G-20 meeting - governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending."
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This news story has 31 comments:

  •  
    Inadequate spending? Thats hilarious

    The unemployed buying new cars & flat screens... they surely should be buying more!
    28 Jun 2010, 10:12 AM Reply Like
  •  
    My ex wife told me the same thing so I borrowed a ton of cash to pay her off and I hit the road. Twenty years later, I'm flush and she's broke, but I bet she's still a disciple of Krugman.
    28 Jun 2010, 10:12 AM Reply Like
  •  
    ...the real problem is inadequate spending...

    WTF...HOW? WE HAVE NO MONEY RETARD!
    28 Jun 2010, 10:13 AM Reply Like
  •  
    If Rush Limbaugh had said this instead of Krugman you guys would have been on board.
    28 Jun 2010, 10:19 AM Reply Like
  •  
    cant you put the koolaid down for 5 seconds?
    its your guy, your party that is wrong
    28 Jun 2010, 10:29 AM Reply Like
  •  
    No party is above greed
    28 Jun 2010, 10:40 AM Reply Like
  •  
    So sad to see such an intelligent and learned man turn himself into a clownish parody.
    28 Jun 2010, 10:20 AM Reply Like
  •  
    Krugman, socialist dreamer that he is, reveals in his conclusion that, in his views, in the end, it's only about jobs, not about fiscal sanity, whether the jobs are productive or who pays for them. The cost side of the equation is never a problem in the Socialist Worker's Paradise.
    28 Jun 2010, 10:22 AM Reply Like
  •  
    It's amazing, with all his training, he can tout such a belief.
    28 Jun 2010, 10:22 AM Reply Like
  •  
    Krugman's worried about a 3rd depression?

    How can that be? Professor Bernanke studied and is an expert in the 1930's depression! He knows everything on how to pull us out and once again make us prosperous like dropping money from helicopters and inflating our way to prosperity and...wait that's what Nobel winner Krugman wants to do too!

    The bottom line Krugman, is the bottom line. Like water, the markets will find the bottom with or without government intervention. Once it does, the real economy will start filling up the tub again with a real productive economy....if the government will let it.
    28 Jun 2010, 10:22 AM Reply Like
  •  
    Spending money you don't have at exponentially higher levels has to hit a wall sometime. That's when our government will really show us the QE it's capable of. Look for inflation soon, Mr. Krugman.
    28 Jun 2010, 10:22 AM Reply Like
  •  
    In early1930, they didn't call it a Depression yet.
    www.businessinsider.co...

    Flash forward to June 2010.

    The Teapublicans have no clue we're in a George W. Bush/Republican/Reagan... Depression, either...
    28 Jun 2010, 10:23 AM Reply Like
  •  
    just say - get help
    28 Jun 2010, 10:35 AM Reply Like
  •  
    Just Say, are you an investor or just a troll?
    28 Jun 2010, 10:44 AM Reply Like
  •  
    The painful, yet necessary medicine that needed to be taken is instead going to be forced down open throats.

    It is necessary and will hurt for awhile. However in the end, this is how you take responsibility and rebuilt what is completely broken.
    I look forward to the USA at some point in the future regaining its top place.
    28 Jun 2010, 10:23 AM Reply Like
  •  
    McMansions, handed a tax cut while fighting two wars, easy money credit cards, "buying" and flipping more houses and condo than there are people to inhabit them, artificially low interest rates, equities markets seen more as casinos than investment tools, SUV's the size of my parent's house, only a matter of time. Even if Keynesian economics were the answer, some suffering may be what is needed to change harmful attitudes.
    This from a pragmatic liberal.
    28 Jun 2010, 10:56 AM Reply Like
  •  
    We flooded the engine to create the initial recession/depression. Wasn't that policy? It is amazing that if you have big bug eyes, passionate opinion, and listen to enough "words of power" cds that you can become and maintain an authority position as a NYT economics editor. And get a dyn-o-mite award, too!!! Gore and BO got em too!
    28 Jun 2010, 10:24 AM Reply Like
  •  
    Third depression? What about the depression of 1920? www.youtube.com/watch?...

    That was one short lived because, wait for it, there was no government intervention!
    28 Jun 2010, 10:26 AM Reply Like
  •  
    Stop watching Youtube and read a book. Factors that economists have pointed to as potentially causing or contributing to the downturn include: troops returning from the war which created a surge in the civilian labor force, a decline in labor union strife, a shock in agricultural commodity prices, tighter monetary policy, expectations of deflation. Harding came into office in April 1921 (following another conservative) while industrial production declines peak/trough 34%. The Dow starts it's recovery in August 1921 and marginal rates are cut in 1923...chicken and egg problem. Oh BTW..We went back into recession in 1924 (Industrial production -18%) and again in 1926. Now...will you be the one who claims that another conservative (Hoover) actually increased US budgets from 1929-1932?...that's a classic new age lie. Hoover did call on the Federal Reserve to make it easier for small businesses to borrow and he encouraged the Farm Board to provide funds to help the stabilization corporations in their efforts to sustain commodity prices. And Hoover also hoped that by providing private advice and making public pronouncements that he could restore national confidence in business. His tax bill of 1930 gave the rich more money which they would presumably spend on reinvesting in the national economy, but did absolutely nothing for the middle class and poor who were the social classes most hurt by the Depression. (sound familiar Lafferites?) Andrew Mellon was appointed the nation's forty-ninth secretary of the treasury by President Harding on March 4, 1921, and was retained by Presidents Coolidge and Hoover, serving as treasury secretary until February 2, 1932. Mellon advocated conservative tax and spending policies for the purpose of reducing overall federal expenditures and outlays for service on the federal debt. His "Mellon Plan," proposed in 1924, called for limiting federal budget expenditures and using surpluses to reduce the debt, a program designed to lower tax rates. The Mellon Plan became the Revenue Act of 1924....But Harding did not advocate a do-nothing government...remember the Tea Pot Dome? Selling public lands to energy producers with zero oversight?...almost sounds like the IG's report on the MMS in 2004-6...selling drilling rights for sex and drugs and then letting the rig operators fill out their own safety reports. If you paid any money to Youtube University...get your money back.
    28 Jun 2010, 11:00 AM Reply Like
  •  
    Easy farm loans combined with the dust bowl - a recipe for a slew of small town bank failures. Sometimes trying to do good will turn around and bite you. Sometimes events will undo an economic fix - no matter how good it might be.
    28 Jun 2010, 11:12 AM Reply Like
  •  
    Take your meds ....MAN
    28 Jun 2010, 10:26 AM Reply Like
  •  
    Am I missing something?

    We need to increase domestic spending to create jobs and payroll taxes and consumer spending that supports the rest of the economy. At the same time we need to reduce the size of our deficit so that we do not jeopardize the future of our children and our country.

    So both sides of the debate have a valid argument.

    Let us bring our troops back from Afghanistan, Iraq, Okinawa, Germany and S.Korea. Not necessarily discharge them from the armed forces.

    Let us cut back on our foreign aid. Specially to countries like Israel that is considered an advanced developed economy and which boasted more millionaires per capita than any other developed economy.

    Let us sell some of our highways and bridges to private companies. They can maintain them with tolls.

    Let us use half the proceeds to reduce the debt and the other half to support States and municipalities so that vital services can be maintained.

    Any takers?
    28 Jun 2010, 10:50 AM Reply Like
  •  
    We need to have government stop injecting borrowed money, thus creating greater future leveragee against GDP. We also need government to stop creating artificial demand with their spending which directly produces inefficiencies of scarce resources.

    Just as important, we need to let current inefficiencies in the market work themselves out. By not letting any company or anyone fail, those inefficiences just linger and continue to create problems. Fannie and Freddie are a perfect example. They were bailed out yet continue to need money to stay afloat. There business models aren't sustainable, they don't create wealth, they consume wealth.

    .
    28 Jun 2010, 11:11 AM Reply Like
  •  
    The debate about policy is necessarily political because votes count, but on a broader level the debate is philosophical. The left trends toward socialism because it provides more equality of outcome. The right trends toward merit because it rewards those who strive and overcome. Both philosophies have their drawbacks. Socialism requires a religious like adherence because it is unnatural and encourages sloth. Meritocracy rewards the few, often at the expense of the many, but it provides greater economic benefits, which can be redistributed if the meritorious are allowed to keep a fair portion of their rewards and therein lies the rub.
    28 Jun 2010, 10:58 AM Reply Like
  •  
    Thank you for being pragmatic and not ideological. The answers to problems lie within thoughtfully looking at situations without a preconceived answer already in your head.
    28 Jun 2010, 11:10 AM Reply Like
  •  
    Well he's half right,we certainly are on the verge of a depression,in less some thing is done
    28 Jun 2010, 11:16 AM Reply Like
  •  
    The tenor of the commentary is increasingly desperate...

    I certainly hope so.

    We were looking for a light at the end of the tunnel? I think I just read it if it proves true; as a desperate Krugman is a fat shoot of hope.
    28 Jun 2010, 12:29 PM Reply Like
  •  
    The answer is actually quite simple
    1) tax the rich and big corporations (they are the only ones who can pay off the debt anyways)
    2) get the stock market out of goldman sachs/manipulators/spe... trade-bots hands
    3) cut government beurocracy at all costs , maybe a reformed tax act

    finally the medicine:
    1) everyone must share the pain
    in USA and Europe
    a)structured default .80 on the dollar
    b) devalue currency 10-15%
    c) austerity (spending cuts across all sectors -not just cutting the poor)
    d) reforming social assistance and welfare : have to give people motivation ,not just dole out money and stimulus
    e) revamp economy (somehow-lol)

    finally , realize that greed and capitalism are not the be all in life..,we have been living outside our means for some time now, at some point one must accept this fact and buy one less big screen or eat out one less time a week. While we stuff our faces on the cruise ship buffet's ,notice that foreign workers with lots less than us are getting mimimum wage.....making life cozy for us...., this lazyness ,service based economy is not productive and will end one way or another ...hopefully not on the backs of the middle class and poor
    28 Jun 2010, 01:16 PM Reply Like
  •  
    You do have some very good points. The rest of the world would like to live the way we do. After all, we did spread democracy and capitilism. We may have to meet them halfway.
    28 Jun 2010, 01:43 PM Reply Like
  •  
    PS: I paid 7.00!!!! for a medium bag of popcorn yesterday at the cinema and spent about 18.00 in various parking fees thru the city last night....and they have the gall to say inflation is in check :)
    28 Jun 2010, 01:24 PM Reply Like
  •  
    Movie Theaters have been gouging scince I was a tot.
    28 Jun 2010, 01:41 PM Reply Like
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