The Lesser Depression

http://www.nytimes.com/2011/07/22/opinion/22krugman.html?emc=eta1

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"Reflective thinking turns experience into insight." (John C. Maxwell)

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Paul Krugman came up with an exceptional insight in his Times post today: we're in a "Lesser Depression." That's a prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than 2 years after the recession supposedly ended.

People will want to "politicize" Krugman as a "left thinking liberal" but I don't think of him that way. He's a Nobel Prize winner for what he's done in economics and deservedly so. And additionally, he writes well about the issues of our times in a creative way using words we can all understand. Parenthetically, I respect the Nobel Prize in spite of the fact that it was awarded to Al Gore for attempting to scare all of us and President Obama for what he "might do."

In not addressing what will fix the real economic problems we are facing now, we instead are making the same mistakes that were made in either 1931 or 1937 (you'd think we would have learned something since then). If either current debt negotiation fails, we could be replaying 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed. And, let me add that both Krugman and Warren Buffet said at the outset of the Great Recession that the U.S. was NOT spending enough money on the economy to get us out of it. And now, we're debating "contraction" when unemployment is going up!

So, while the European Central Bank seems determined to raise interest rates (these are the same idiots that were bailed out by Ben Bernanke at the outset of the Great Recession when he sent a check for $250 billion to them because he thought they needed it), Krugman quotes an old saying on public policy: "You do not know, my son, with how little wisdom the world is governed."

Need I say more.