Paul Krugman's Magic Keynesian Mirror Sees Non Exsistant Economic Recovery

Economics / Recession 2008 - 2010
Jun 08, 2010 - 04:11 AM

By: Mike_Shedlock

Paul Krugman is quite upset with the deficit hawks at the G-20, so much so that he says Lost Decade, Here We Come http://krugman.blogs.nytimes.com/2010/0 ... e-we-come/

The deficit hawks have taken over the G20.

It’s basically incredible that this is happening with unemployment in the euro area still rising, and only slight labor market progress in the US.

The right thing, overwhelmingly, is to do things that will reduce spending and/or raise revenue after the economy has recovered — specifically, wait until after the economy is strong enough that monetary policy can offset the contractionary effects of fiscal austerity. But no: the deficit hawks want their cuts while unemployment rates are still at near-record highs and monetary policy is still hard up against the zero bound.

Utter folly posing as wisdom. Incredible.

G-20 an Amazing Success

In sharp contrast, I called the G-20 an Amazing Success http://globaleconomicanalysis.blogspot. ... ok-at.html

With all the heated debate and every country doing what they want, inquiring minds just may be asking "How the heck can you call this a success?"

That's a good question so let's highlight the positives.

Defining G-20 Success

Merkel and Trichet politely told Geithner to go to hell. Given that Geithner needs to be fired, this is a positive event.

Europe is more concerned about sovereign debt issues than stimulating growth. Only fools like Geither and the IMF would argue against that.
No one paid any attention to Geithner or the Keynesian clowns at the IMF, most notably, IMF Managing Director Dominique Strauss-Kahn.
There was no agreement on a universal bank levy. A universal tax is the wrong approach to risk management and it punishes banks with good lending practices.

Geithner made a complete fool out of himself.

A dozen cheers for German Chancellor Angela Merkel who said “We can only spend what we receive in income.â€