Paul Krugman

[winston]

World economy stabilizing: Krugman

ABU DHABI (Reuters) - The world economy has avoided "utter catastrophe" and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.

"I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now," Krugman told a seminar.

"I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

The Princeton professor and New York Times columnist has said he fears a decade-long slump like that experienced by Japan in the 1990s.

He has criticized the U.S. administration's bailout plan to persuade investors to help rid banks of up to $1 trillion in toxic assets as amounting to subsidized purchases of bad assets.

Speaking in UAE, the world's third-largest oil exporter, Krugman said Japan's solution of export-led growth would not work because the downturn has been global.

"In some sense we may be past the worst but there is a big difference between stabilizing and actually making up the lost ground," he said.

"We have averted utter catastrophe, but how do we get real recovery?

"We can't all export our way to recovery. There's no other planet to trade with. So the road Japan took is not available to us all," Krugman said.

Global recovery could come about through more investment by major corporations, the emergence of a major technological innovation to match the IT revolution of the 1990s or government moves on climate change.

( Investment by major corp ? Who ? Technological Innovation ? What ? .... NOISE ! )

"Legislation that will establish a cap-and-trade system for greenhouse gases' emissions is moving forward," he said, referring to the U.S. Congress.

"When the Europeans probably follow suit, and the Japanese, and negotiations begin with developing countries to work them into the system, that will provide enormous incentive for businesses to start investing and prepare for the new regime on emissions... But that's a hope, that's not a certainty."

Source: Reuters

[winston]

Paul Krugman, the famed-economist, New York Times columnist, and government apologist, says we have nothing to fear from the Fed's massive inflation of its balance sheet.

Krugman, who gets paid to write columns, is opposed in his position by an entire host of legendary speculators – men who get paid to make money in the markets. These real-life experts (Paulson, Einhorn, Rogers, and your humble editor) believe America has entered into a new period of rampant monetary inflation.

Recently joining the ranks of the inflation camp: Nassim Taleb, the brilliant mathematician and author of Black Swan, whose $6 billion hedge fund is now primarily positioned to capture inflation-related gains, including shorting U.S. Treasury bonds.

Who do you believe will be proven right, the academic policy wonk who writes for the New York Times or the moneygrubbers?

http://www.growthstockwire.com/

[LenaHuat]

Now, he thinks that the US recession will be over by September

[winston]

Nobel Winner Krugman Sees U.S. Recession Ending Soon (Update1) By Courtney Schlisserman

June 8 (Bloomberg) -- The U.S. economy probably will emerge from the recession by September, Nobel Prize-winning economist Paul Krugman said.

“I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”

U.S. stocks erased an earlier decline after Krugman made his comments. The Standard & Poor’s 500 Stock Index was little changed at 939.14 at 4:07 p.m. in New York after slumping as much as 1.5 percent earlier, and the Dow Jones Industrial Average gained 1.36 points to 8,764.49.

Krugman, a Princeton University economist, has warned recently that the U.S. government hasn’t done enough to help the country’s economy recover. Last month, at a conference in Abu Dhabi, he said the fiscal stimulus is “only enough to mitigate the slump, not induce recovery.”

The National Bureau of Economic Research, based in Cambridge, Massachusetts, is the official arbiter of U.S. recessions and expansions. Last week, Robert Hall, the head of the NBER’s business-cycle-dating committee, said it’s “way too early” to say the contraction is over.

The U.S. has been in a recession since December 2007, and the NBER may take months to decide when a trough has been reached. Recent reports have shown an easing of declines in industrial production and other measures that the group reviews when determining whether the economy is in a recession.

Unemployment to Rise

Even with a recovery, “almost surely unemployment will keep rising for a long time and there’s a lot of reason to think that the world economy is going to stay depressed for an extended period,” Krugman said.

( So a jobless recovery ie. a depressed economy over an extended period, is now be defined as a "recovery" ? )

The unemployment rate jumped to 9.4 percent in May, the highest since 1983, partly reflecting more people joining the labor force to look for work.

The U.S. Federal Reserve’s efforts to stabilize markets -- measures that have swelled the central bank’s balance sheet -- have helped, Krugman said. “A lot of the spreads in the markets have come down” and “the acute financial stuff seems to have come to a halt,” he said.

Fed officials lowered the benchmark interest rate to a target range of zero to 0.25 percent in December and have switched to using credit programs and outright purchases of Treasuries, mortgage-backed securities and housing agency debt as the main tools of monetary policy.

$2.31 Trillion

The balance sheet’s size peaked at $2.31 trillion in December. It has fluctuated around $2.1 trillion over the past two months.

The Fed’s swollen balance sheet is “a little alarming. In the long run you really don’t want the central banks to be so involved in the business of lending,” Krugman said. “But it’s arguably necessary” even if there are questions about “where does it stop?”

Source: Bloomberg

[winston]

US economy mending: Krugman

The US economy is stabilizing and may have bottomed out, as the government's stimulus plan probably saved a million jobs, Nobel Prize winner Paul Krugman said yesterday.

A second stimulus package for the economy is still needed, and should be directed at state and local governments as well as infrastructure spending, Krugman said in an interview in Kuala Lumpur. The world economy may face several years of weak growth without falling into a double-dip recession, he said.

"It's quite possible, though not certain, that retrospectively, we'll say that the recession ended in July or August, maybe September," Krugman said. "My guess is that we've bottomed out now, that August was probably the trough month."

The pace of US job losses slowed more than forecast in July. And the Commerce Department reported on July 31 that US gross domestic product shrank at a better-than-forecast 1 percent annual pace in the second quarter after a 6.4 percent drop in the prior three months.

"What we're seeing is stabilization," Krugman said. "We're seeing that the great freefall and the nosedive seem to be over. It's leveling out but that is very different from returning to normality."

Krugman pointed to the employment figures as evidence that the worst may be over for the US economy. He said in June that the United States may emerge from its downturn by September.

BLOOMBERG

[millionairemind]

Aug 11, 2009
2 years or more for recovery
Nobel Prize-winning economist Paul Krugman says worst is over, but world economy still needs second stimulus

KUALA LUMPUR - AGGRESSIVE stimulus spending by governments helped the world avoid a second Great Depression, but full economic recovery will take two years or more, Nobel Prize-winning economist Paul Krugman said on Monday.

He added that the worst of the global crisis was over, with economic and exports growth showing signs of stabilisation.

Still, recovery is likely to be 'disappointing' as government spending is not sustainable in the long run and the unemployment rate is still lagging behind, he told a two-day World Capital Markets Symposium on Monday in Kuala Lumpur.

There is not likely to be any 'Phoenix-like' recovery, such as in the 1997-98 Asian financial crisis when economies expanded dramatically, led by a sharp rebound in exports, he said.

'We have managed to avoid a second Great Depression...but full recovery is at least two years and probably more,' Mr Krugman said. Asia is likely to see a faster rebound than the United States and Europe, partly driven by recovery in manufacturing exports, he added.

Mr Krugman said there was still room for the US government to increase spending to boost growth, despite concerns over its swollen budget deficit.

In an interview with CNBC in Kuala Lumpur on Monday, he added that the world economy needs a second stimulus if it is to avoid the fate of Japan in the 1990s, when the country was stuck with years of sluggish growth.

The US Labour Department last Friday showed that the jobless rate in the world's largest economy dipped for the first time in 15 months, while workers' hours and pay edged upwards.

But it is hard to pinpoint the sources of future growth as the financial crisis has left the world with excess capacity and the possibility of high unemployment everywhere, according to Mr Krugman.

He said: 'Right now, I think the world as a whole kind of looks like Japan in the early 90s. Not a catastrophe, but we really don't know how we get serious growth going. Actually, the slump globally has been much worse than anything Japan had during that lost decade.'

[Musicwhiz]

2 years ? That's pretty short. I was expecting them to say 8-10 years.

[kennynah]

2 years ? That's pretty short. I was expecting them to say 8-10 years.

wow...aren't you a pessimist

although i have no idea who this paul krugman is and how he became a Nobel laureate, i tend to pay attention to these great achievers.... i am a rather academic bias person.... my bad...

[LenaHuat]

Read Krugman's latest comments. They are the same thoughts in my mind right now.
And by my measures, these do not favor a big push up for equities for the next maybe 2 months.
But I stay optimistic......meaning no downside surprises.

[winston]

Krugman: Unemployment Will Peak in 2011

LJUBLJANA -- Unemployment in the United States will peak only in early 2011 because of a slow and painful recovery from the global economic crisis, Nobel Prize-winning economist Paul Krugman said on Wednesday.

http://moneynews.newsmax.com/economy/un ... 61226.html