In an interview with the British Observer, liberal economist Paul Krugman confronts the possibility that our current economic problems do not lend themselves to a quick fix:
The risk for long stagnation is really high . . .Most people seem to believe that the mess we're in is just an ordinary recession -- a few quarters of bad news, and then we'll be right back on our feet again. The problem with that belief is that the disastrous meltdown of housing values over the past three years is unprecedented in recent American history.
The size of the shock to our systems is going to be much bigger than what happened to Japan in the 1990s. . . .
Not since the crash of 1929 has the U.S. economy sustained such a drastic loss of asset value. Recovering from that kind of catastrophe will not be easy or quick, and fully recovery will only be delayed by the kinds of neo-Keynesian approach being pursued by Pelosi, Reid and Obama.
The Fundamentals Still Suck, and The Worse Is Yet To Come.
UPDATE: How bad is it? Joe Biden admits they "guessed wrong" about the stimulus. Heh.