Paul Krugman: Deep Hole Economics

[marmar]

from the NYT:




Deep Hole Economics
By PAUL KRUGMAN

Published: January 2, 2011


If there’s one piece of economic wisdom I hope people will grasp this year, it’s this: Even though we may finally have stopped digging, we’re still near the bottom of a very deep hole.

Why do I need to point this out? Because I’ve noticed many people overreacting to recent good economic news. What particularly concerns me is the risk of self-denying optimism — that is, I worry that policy makers will look at a few favorable economic indicators, decide that they no longer need to promote recovery, and take steps that send us sliding right back to the bottom.

So, about that good news: various economic indicators, ranging from relatively good holiday sales to new claims for unemployment insurance (which have finally fallen below 400,000 a week), suggest that the great post-bubble retrenchment may finally be ending.

We’re not talking Morning in America here. Construction shows no sign of returning to bubble-era levels, nor are there any indications that debt-burdened families are going back to their old habits of spending all they earned. But all we needed for a modest economic rebound was for construction to stop falling and saving to stop rising — and that seems to be happening. Forecasters have been marking up their predictions; growth as high as 4 percent this year now looks possible.

Hooray! But then again, not so much. Jobs, not G.D.P. numbers, are what matter to American families. And when you start from an unemployment rate of almost 10 percent, the arithmetic of job creation — the amount of growth you need to get back to a tolerable jobs picture — is daunting. ..............(more)

The complete piece is at: http://www.nytimes.com/2011/01/03/opinion/03krugman.html?_r=1&hp

[bvar22]

1. I disagree with Krugman today.

Krugman says:
"Even though we may finally have stopped digging,..."

We haven't "stopped digging".
The recent (permanent) Tax Cuts for the RICH WILL be paid for by the children of the Working Class.
There is no such thing as a "Tax Cut" while running a deficit.
Every single penny plus interest WILL have to be paid back.

"They" (Democrats & Republicans) have merely refinanced the farm and sent the bill to our children.
The RICH have gotten away with (permanent) cuts to the top marginal rates, the Inheritance Tax, AND Capital Gains Taxes,
thereby shifting the repayment burden to the backs of the Working Class.

Thank You, Republicans and "Centrist" Democrats.

The Working Class & The Poor no longer have a viable voice in either Political Party,
and haven't since Reagan.


"There are forces within the Democratic Party who want us to sound like kinder, gentler Republicans."---Paul Wellstone