Paul Krugman: End of World 'Postponed'

[sabra]

Source: CBS News

Princeton economist and New York Times columnist Paul Krugman (pictured left in a file photo) is feeling optimistic — at least in terms of a global financial apocalypse being averted.

Bloomberg's Kati Pohjanpalo reports that, speaking at a seminar in Helsinki today, the Nobel Prize-winner said that "the end of the world appears to have been postponed."

Krugman indicated that the recession in the United States may have ended this summer, and that globally the economic downturn has bottomed out.

He said the world economy "does not appear to be falling into an abyss" but is still in trouble, and warned that recovery will be "slow and painful."

How slow? How painful? Krugman predicted that U.S. unemployment may continue to rise until early 2011

Read more: http://www.cbsnews.com/blogs/2009/09/21/business/econwatch/entry5326697.shtml?tag=stack

[nc4bo]

1. Where's Robin Hood when you need him?

This is such bad news but WS is probably having multiple orgasms over it.

Sooner or later it's all going to hit them in the nuts, can't happen soon enough for me.

[bertman]

2. This is pretty much how Krugman called it last September or October. 10% unemployment

followed by a LONG, SLOW climb out of the pit. A climb that would be very painful.

Thank you, Goldman Sachs and other Wall Street crooks.

Recommend.

[FarCenter]

3. Thank you Countrywide, IndyMac, Golden West Financial, WaMu and other California crooks

[KamaAina]

6. And Lehman Bros., Bear Stearns, AIG...

oh, right, those are East Coast crooks. My bad.

[FarCenter]

8. The rotten mortgage business that started the process was a California innovation

Even Washington Mutual was a decent Washington state company, but they went wrong after acquiring Great Western Bank and H F Ahmanson in California.

[JDPriestly]

11. The rotten mortgage business would have been a blip on the screen

had it not been for the CDOs and CDSs. You need more information. Please read more about CDOs and CDSs, Read before you write. Good rule. Know what you are talking about before you express yourself. Also a good rule.

[FarCenter]

14. I know how CDOs and CDSs work -- the ones that blew up were written on alt-A and subprime mortgages

The main root cause of the problem was the unconscionable mortgage practices of the big mortgage companies, especially the largest, trend-setting ones in California.

The secondary root cause was the trade deficit, which the Free Trade policies of the Bush and Clinton administrations did nothing to curb. This provided the demand from foreign investors for the debt instruments created from the bad mortgages.

The middlemen on Wall Street, who bundled, sliced, diced, and insured the mortgages for the buyers are partly responsible, but I put them in third place.

[JDPriestly]

19. The CDOs and CDSs happen to have been written on the mortgages.

If you understood these things, you would know that the CDSs in particular were not really linked to the mortgages at all. They could be and often were created out of thin air with only an imaginary link to the mortgage industry. They caused the major part of the problem.

A CDS is a privately negotiated derivative through which a “buyer” pays an agreed-upon amount to a “seller” and, in return, receives a payment if a certain event occurs (e. g. , the underlying financial instrument defaults). The buyer does not need to own the underlying security and does not have to suffer a loss from the event in order to receive payment from the seller. Thus, CDS can be used for speculating

(“naked CDS”) or hedging (“non-naked CDS”). And buyers and sellers can swap their contracts with others, though there is no oversight or transparency mechanism for the swaps.

http://www.cga.ct.gov/2008/rpt/2008-R-0668.htm

CDSs could be based on any sort of transaction. It was just easy to sell them if they were marketed as having to do with mortgages because their imaginary link to the mortgage market made people think they were involved somehow in the ever rising real property market.

[No Elephants]

21. Mortgages were NOT the root cause of the problem. If anything, the derivatives fueled the mortgage

frenzy.

[Zoeisright]

12. And Bush and Cheney and Reagan and Gingrich

and all the rest of the rotten repukes who almost destroyed this country with their greed and stupidity.

[JDPriestly]

10. You are pointing to only a few of the guilty guys. Read the book,

The Looting of America. It explains the CDOs and CDSs. That is what really brought us down. The mortgage companies were only one small part of it.

[gratuitous]

4. Oh, and thank you Bush administration

Handing over the keys to the Treasury to the greediest motherfuckers on the planet and figuring that they would manage a de-regulated environment so as to bring the biggest benefit to the largest number of people. How'd that work out? I mean, for anyone not in your base, i.e., the "Haves" and "Have Mores."

[No Elephants]

22. Bush AND the Democratic Congress. And Bernanke and his protege, Geithner, both

hired by Obama, as well as Bush's man, Paulson.

And what threw open the door was repeal of the Glass Steagall Act, proposed by Gramm, McCain's financial advisor, pass by a Republican Congress and signed into law by Bill Clinton.

And what started the ball rolling was Reaganomics and dismantling or eviscerating of the safeguards that were already in place: anti-trust regulation (too big to fail), securities regulation, etc.

We were not screwn by Bush or the Republicans or by Clinton or the Democrats. The Republicrats and the lobbyists have been setting us up since 1980.

(If you misdiagnose, you mistreat.)

[Mari333]

5. ending 2 stinking expensive 'wars' would help!

and slapping tariffs on imported goods..and bitch slapping companies who outsource..
in the meantime, we are still getting shafted by WS

[HamdenRice]

7. Keynes to the rescue!

Krugman accurately pointed out that if nothing had been done we'd be in Great Depression II.

We now have a nasty, nasty recession rather than Great Depression II.

[Demeter]

15. Within 5 Years, Depression 2.0 will still occur

Never fear. Kicking the can down the road does nothing for the road, the can, or your foot.

[Odin2005]

17. That's what the Libertarian Austrian School morons are saying. Screw them.

They will never admit that government intervention helps, it's against their secular religion.

[Name removed]

18. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Romulox]

9. Krugman, testing the wind, returns to his "globalist"/neoliberal roots.

That populism thing he tried for a time just wasn't a fit. :shrug:

[blueworld]

13. The world will end in 2012 anyway, so big deal. I ain't making that mortgage pay't n/t

[Odin2005]

16. I see the usual folks are turning on Krugman.

:eyes:

[Barrett808]

20. Then he hasn't read my blog:

http://desdemonadespair.blogspot.com

Take a Xanax first...