Krugman- The mistake of 2010

[n2doc]

By PAUL KRUGMAN
Published: June 2, 2011

Earlier this week, the Federal Reserve Bank of New York published a blog post about the “mistake of 1937,” the premature fiscal and monetary pullback that aborted an ongoing economic recovery and prolonged the Great Depression. As Gauti Eggertsson, the post’s author (with whom I have done research) points out, economic conditions today — with output growing, some prices rising, but unemployment still very high — bear a strong resemblance to those in 1936-37. So are modern policy makers going to make the same mistake?


Mr. Eggertsson says no, that economists now know better. But I disagree. In fact, in important ways we have already repeated the mistake of 1937. Call it the mistake of 2010: a “pivot” away from jobs to other concerns, whose wrongheadedness has been highlighted by recent economic data.

To be sure, things could be worse — and there’s a strong chance that they will, indeed, get worse.

Back when the original 2009 Obama stimulus was enacted, some of us warned that it was both too small and too short-lived. In particular, the effects of the stimulus would start fading out in 2010 — and given the fact that financial crises are usually followed by prolonged slumps, it was unlikely that the economy would have a vigorous self-sustaining recovery under way by then.

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http://www.nytimes.com/2011/06/03/opinion/03krugman.html?_r=1&hp

[fasttense]

1. As Krugman has pointed out, we have already made the mistakes of 1937

We are headed for another slump.

But don't worry, doctors and the rich are doing just fine.

[Distant Observer]

2. Stagnation under Obama is a Repug political strategy, and letting the Bush cuts stand was a coup.

Obama was suckered into giving the republicans their tax cut without any alternative revenue commitments or agreement to raise the debt limit.

There is now not enough revenue in the forecast to justify more spending for innovation and job creation. The Pres is going to pay a high price for trusting the lying bastards.