Wednesday, January 07, 2009

Great Depression II?

Paul Krugman, recent winner of the Nobel rize in economics, has posted a column in today's New York Times revealing that the world is terrifyingly close to the "nightmare scenario" of a second great depression. Here's his conclusion:

All of this leaves me concerned about the prospects for the Obama plan. I’m sure that Congress will pass a stimulus plan, but I worry that the plan may be delayed and/or downsized. And Mr. Obama is right: We really do need swift, bold action.

Here's my nightmare scenario: It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it's only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.

So this is our moment of truth. Will we in fact do what's necessary to prevent Great Depression II?

1 comment:

Missy said...

Where is our political will?

God help us all. When times are hard for us, the richest nation in the world, imagine what it's like else where.

I have this kernal of worry that we will see large scale famine and human suffering.