Jun 29th 2010 By Jeremy Taylor
Nobel Prize–winning economist Paul Krugman
dropped the big, scary D-word in The New York Times yesterday.
"Depression," screamed the headline of Krugman's influential twice-weekly column screamed
. It ended in a similarly dramatic manner: "[There will be] tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."
What set Krugman off was the G20 Summit
in which the powers of Europe rejected Barack Obama
's (and Krugman's) call for more government stimulus. Instead, they pushed for the opposite strategy: cuts in public spending and deficit reduction
, as the way out of the worldwide economic slump.
It's possible the sting of European "sophisticates" endorsing an economic plan that would be welcomed by the Tea Party pushed Krugman, a liberal icon, to his wit's end, causing him to overstate his argument for impending depression.
Nevertheless, with an unemployment picture that hasn't improved over the past year, and a meager growth rate, which continues to be adjusted downward
, there is some evidence that this lingering recession could turn into something worse.
We discuss some indicators for and against a depression below. First, however, we want to know if you're buying this renewed talk of economic disaster.
Krugman Might Be Onto Something:
Are we headed for another depression?
|Yup -- it's time to pay the piper ||376 (35.6%)|
|Nope -- we'll start coming of this soon enough||195 (18.5%)|
|I don't know -- and I'm pretty sure the 'experts' don't know either||484 (45.9%)|
Krugman's Just Bitter Because World Leaders Don't Take His Ideas As Seriously As Huffington Post Readers:
- Ever since the fall of Lehman in 2008, there has been just about no good economic news from anywhere in the world. That has to mean something.
- It's fun and dramatic to declare an imminent depression because of political maneuvers you don't agree with. Much like folks seem to enjoy hyperbole when predicting the next world war. When pundit-types talk of potential world war, however, it doesn't actually increase the likelihood there will be a world war. But when the Krugmans of the world scream "Depression!" it could actually tip the scales toward that outcome, since consumer and employer confidence play into an economy's performance.
- There was a worldwide depression in the 1870s, and then again in the 1930s. We may be past due for another.
- Our governments understand an awful lot more about macroeconomics and monetary policy -- and how to fix them when they go awry -- than their hopeless counterparts during previous depressions did.
- Did Krugman even bother to survey boxcars for hobos who might be carrying all their possession in a burlap sack, which they have attached to a stick? If he glossed over that most important of depression metrics (and we strongly suspect that he did), he really just needs to STFU.
- With serotonin-manipulating drugs, like Prozac, changing the very nature of depression, wouldn't it be more accurate to label this potential period of economic decline as "a time of affect-less emotional stability, accompanied by nausea, headaches and certain sexual side effects"?