Paul A. Samuelson
On the Road to Economic Recovery (c) Drew Sheneman
Legend tells of the boy who often cried "wolf" when in fact there was no wolf. It involves the case where the boy cried "wolf" when indeed there was a ferocious wolf, but no one had paid attention.
Ever since the global meltdown began in 2007,
Well, we have now entered 2009's second half.
Yes, and unemployment is still rising. So are bankruptcies and mortgage foreclosures.
Despite the admirable rescue operations of the Obama team, the
Unemployment will worsen still, and shortfalls in the GDP growth rate will persist.
It is rational for a rescued bank to be afraid to enter into risky lending. (In serious recession times, almost all ventures seem risky to rational bankers!) Why can't orthodox central bank operations reverse accelerating recessions? Early on official shortest-term assets are given yields that approximate zero. At zero interest rates, everyone freezes up and becomes a hoarder.
Macroeconomists taught in the 1970s and 1980s at elite
When a few of us, as far back as spring of 2007, warned that meaningful recovery might be delayed by years, we were only a lunatic minority.
A pretty fable.
Yes, those financial engineering tools, invented at the likes of
Instead of controlling riskiness, the new tools -- swaps, puts and calls, securitized packets of mortgage loans -- under
Result: an ultra-fragile financial system, prone to the global collapses and meltdowns seen in 2007-2009.
President Obama's resourceful Treasury secretary,
He errs. The rescue of needed new sustained
Yes, had there not been the massive Geithner-Bernanke rescue moves, by this time blood might be flowing in America's city streets. But
has any member of Obama's crack economic team spoken day and night about the need to send to
When as a teenager I entered graduate study at the Chicago Midway in 1932, it was the worst time of the post-1929 depression. Republican
Today's macro scholars were poorly prepared to avoid post-2006 meltdowns.
While they still prattled mostly about transparency and inflation targeting, they didn't notice how
Their textbooks, whether introductory or advanced macroeconomics, did not teach about "liquidity traps" or "paradoxes of thrift," whereby
the attempt of people and businesses to save more only served to kill off rather than augment
It is giving sustained funds to ready spenders that counts most.
Now, in the second half of 2009, it is too late to begin to spend on shovel-ready projects. States and municipalities need help to meet their budget needs, and they take time to achieve legislative agreement on how to deal with deficits and how to spend government stimulus funds.
Suffering states will spend whatever they are given
So discount those rosy assurances of meaningful recovery a few months from now.
Republican members of
Only an Obama has the charisma and popularity to insist on meaningful needed new and sustained deficit spending. Yes, deficit spending.
It took all of
May democracies in the 21st century quickly achieve the compromises needed to restore economic sanity.
Why June Jobs Report Is So Depressing
The brutal truth about the
Nine Reasons the Economy is Not Getting Better
Mortimer B. Zuckerman
We are now looking at unemployment numbers that undermine any confidence that we might be nearing the bottom of the recession. The appropriate metaphor is not the green shoots of new growth. A better image is to look at the true total of jobless people as a prudent navigator looks at an iceberg
Would Second Stimulus Create Jobs?
Americans are stumbling through a job market that is overwhelmed with supply, stripped of security, and skimmed of hours and benefits, and the unemployment rate has already climbed much higher than officials had forecast. So, the real question is, what could a second Obama administration stimulus do that the first one couldn't? To answer that, it's necessary to know how the first $787 billion package has disappointed.
Why No One Can Guess When Recovery will Occur
Paul A. Samuelson
Federal Reserve Chairmen Ben Bernanke glimpses a possible recovery by year end. He is a cautious scholar, backed by the best forecasters in the world at the Federal Reserve Board.
I would be a rash fool to quarrel with this quasi-optimistic view that by year end some stability will occur. You and I should hope that there will indeed be a glimmer of light at the end of the tunnel ahead. ...
A few days after writing about how the United States is not heading towards socialism, Joseph Stiglitz suggests that might not be true about the rest of the world. Stiglitz argues that the lesson many Third World nations might take from the financial crisis is that capitalism is fundamentally flawed.
Not Going to Be Economic Depression
Global Economic Viewpoint
Last week at the Milken Global Conference, three Noble Laureates in Economics sat down to discuss the global recession -- Gary Becker (Nobel Prize, 1992), Roger Myerson (Nobel Prize, 2007) and Myron Scholes (Nobel Prize 1997).
All three agreed that this is not going to be a depression and that the free-market economy is fundamentally healthy.
Recent Commentary on the Economic & Financial Crisis
- Some Good News About Banking
- Obama Economic Team's Flawed Cosmology
- Larry Summers: Brilliant Mind, Toxic Ideas
- Tim Geithner, CNBC & The Second Coming of Known Unknowns
- Could America Suffer Japan's 'Lost Decades'
- The Global Economy: Worse & Worser
- Today's Global Economic Debacle: The Japan Fallacy
- Financial Outrages Past, Present & Future
- Even the US can Manage Itself into Economic Irrelevance
(c) 2009 PAUL SAMUELSON