Whatever the new administration does, we're in for months, perhaps even a year, of economic hell. After that, things should get better, as President Obama's stimulus plan -- OK, I'm told that the politically correct term is now "economic recovery plan" -- begins to gain traction. Late next year the economy should begin to stabilize, and I'm fairly optimistic about 2010.
But what comes after that?
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Here are words to heed from Nobel winner Krugman, who outlines salient facts of a new economic system in the offing. Although nobody knows quite what that will be, what it won't be is another bubble, with Americans spending their brains dizzy. That means the global economy will search for another economic engine while the US hunkers down just to subsist, albeit with much government help, for a long time.
“..things can’t just go back to the way they were before the current crisis.” More »
Mr. Krugman offers some ideas on what could/should come after the economy has reached some kind of stability.
Krugman asks what comes after the bubble gets deflated and temporary stimuli run their course. Not many answers, but a good question.
Personally, I have a hunch that we won't see recovery in under 5 years and we better hope we do not. Say we get back to a modest 2% growth rate. That is a doubling of our GDP every 35 years. Say optomistically with new technology this doesn't double our use of water, comodities, production of garbage and pollution but only increases them by half. How many states or countries have available half as many resources again as they are using now and can deal with half as much again of ... More »
Conclusions, predictions and wishful thinking. If the economy is at least partly back by 2010, Obama will be a miracle worker.
Oversite, Oversite, Oversite. You cannot express this enough. No more sub-prime lending and keep the fox out of the henhouse. We also need a full explanation of what slezball Paulson did with 375 billion dollars. We can only hope that Obama & Co. will put the money where it was supposed to go. Mortgage relief for people losing their homes.
Krugman always knew exactly what Bush was doing wrong but now he doesn't seem to know what advice to give to Obama.
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