Of all the articles I've read on the financial situation.... this makes the most sense.




http://www.nytimes.com/2010/06/28/opinion/28krugman.html

Shawnna

Paul Krugman: Why We Could Be Entering 'A Third Depression'

Read More: Banks, Depression, Economic Recovery, Economy, Jobs, Long Depression, Paul Krugman, Third Depression, Business News Nobel Prize winning economist and New York Times columnist Paul Krugman has issued perhaps the most frightening prediction for the future of the global economy.

In his column today, Krugman worries that a move toward austerity by world governments -- near-term budget-slashing to curb deficits -- will plunge the economy into a "third depression." On the heels of last week's G20 meeting in Toronto, where world governments pledged to halve deficits by 2013, Krugman is deeply concerned that there just won't be enough stimulus in the economy to recover from the prolonged downturn.

Here's Krugman:

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost -- to the world economy and, above all, to the millions of lives blighted by the absence of jobs -- will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world -- most recently at last weekend's deeply discouraging G-20 meeting -- governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.


Krugman isn't alone in his fear that the world economy is becoming increasingly precarious. The Wall Street Journal noted that members of the Federal Reserve are in private planning for the possibility of a double-dip recession in America -- a concern shared by MarketWatch's in-house economist.

The job picture in America certainly isn't comforting, and the mounting ranks of the jobless may lend some support to Krugman's pro-stimulus thesis. This chart, from the Saint Louis Federal Reserve, shows that long-term unemployment is skyrocketing::



World leaders scared by the Greece's near economic collapse, Krugman argues, are facing a choice between deficits and jobs. An unhealthy reliance on cutting deficits, he argues, will exact a serious price on "tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."

http://www.huffingtonpost.com/2010/06/2 ... 27452.html

http://www.nytimes.com/2010/06/29/business/global/29austerity.html?src=me&ref=homepage

In Ireland, a Picture of the High Cost of Austerity
By LIZ ALDERMAN

DUBLIN — As Europe’s major economies focus on belt-tightening, they are following the path of Ireland. But the once thriving nation is struggling, with no sign of a rapid turnaround in sight.

Nearly two years ago, an economic collapse forced Ireland to cut public spending and raise taxes, the type of austerity measures that financial markets are now pressing on most advanced industrial nations.

“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let’s get this over with quickly.’ ”

Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.

Joblessness in this country of 4.5 million is above 13 percent, and the ranks of the long-term unemployed — those out of work for a year or more — have more than doubled, to 5.3 percent.

Now, the Irish are being warned of more pain to come.

“The facts are that there is no easy way to cut deficits,” Prime Minister Brian Cowen said in an interview. “Those who claim there’s an easier way or a soft option — that’s not the real world.”

Despite its strenuous efforts, Ireland has been thrust into the same ignominious category as Portugal, Italy, Greece and Spain. It now pays a hefty three percentage points more than Germany on its benchmark bonds, in part because investors fear that the austerity program, by retarding growth and so far failing to reduce borrowing, will make it harder for Dublin to pay its bills rather than easier.

Other European nations, including Britain and Germany, are following Ireland’s lead, arguing that the only way to restore growth is to convince investors and their own people that government borrowing will shrink.

The Group of 20 leaders set that in writing this weekend, vowing to make deficit reduction the top priority despite warnings from President Obama that too much austerity could choke a global recovery and warnings from a few economists about the possibility of a much sharper 1930s style downturn.

snip

The only people that make money of these things are the bloody banks.

The rest of us are required to PAY MORE in Utilities we are asked to lose amenaties due to poor management by our elected officials all the while our pay checks go up 1-3% a year

I am getting so sick and tired of this BS it's NOT even funny.

I think its high time we start hanging these eletist bastards on our parlimentary lawns, maybe then they will listen to us

Agree, L. Since when did financial investors get to have so much say in the governing affairs of whole countries?

These a$$holes need to mind their own bidness.

Yeah, I get the fact that we borrowed (heavily) from the bankers and investors. But, puhlease, just how many of those bankers told countries "oh, come on - you can afford more than that! You can make a killing with this money!"

So they wind up making money BOTH ways.

Satan's spawn all of them!

This is closer to the factual truth than you can imagine.

hat tip to Guanosphere

Economy caught in 1930s-style Depression, not a recession: leading economist
by : Jeff Cox - CNBC
Published : Tuesday, August 24 2010 20:37

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response."

Full story... http://www.polijam.com/index.php?option ... &Itemid=54

Received this email from my sister today... thought it fit well with this post


Check out this story. A conveeenient time to release these photos, which have been in the archives since they were first taken! History becomes "his"story once again.

Color me cynical, but it speaks to things getting a whole lot worse before they get better. The start of some sort of PR campaign to make people feel like a depression isn't so bad, etc? A frayed coat here, pancakes for supper there...not a problem.


http://www.dailyfinance.com/story/libra ... /19595159/


Leo

From the article, Leo posted above.

See folks - it wasn't so bad why you got a new set of clothes under the Christmas tree.

What a load a crap!

Now you see it - now you don't. Anyone want to play hide the truth?