Robert Kuttner: Recovery, Please

[marmar]

from HuffPost:



Will the recession just go on and on and on? In the absence of far more vigorous government action, it certainly looks that way.

At a recent conference sponsored by several think tanks, Paul Krugman declared that the recession could literally continue indefinitely because the economy is stuck in a cycle of depressed wages, reduced consumer purchasing power, damaged banks, and business hesitancy to invest -- and no strategy on the political horizon is about to alter this dynamic.

It's not surprising to hear that from Krugman. The startling thing was that his two co-panelists, former Reagan chief economist Martin Feldstein and the chief economist of Goldman Sachs, Jan Hatzius, agreed that massive stimulus spending was the necessary cure.

In similar circumstances in the middle and late 1930, GDP growth turned positive, but unemployment remained stuck in double digits. It took the accident of World War II for government to spend and invest at a level that finally brought back full production and full employment. Annual deficits were as high as 28 percent of GDP, more than triple the current level. Once prosperity returned, however, the debt level came steadily down. ..........(more)

The complete piece is at: http://www.huffingtonpost.com/robert-kuttner/recovery-please_b_765901.html

[DemocratSinceBirth]

1. I Was Listening To Nouriel Roubini Who Predicted This Current Mess

He said that we can look forward to gridlock which will result in the short term problem of a lingering recession not being addressed and the longer term problem of ballooning deficits.

We are screwed as a nation.

[xchrom]

2. Recommend - the bad things going won't just stay static.

They will at some point gather energy and make things
Much worse.