Nobel Economist: The Worst is Over

Paul Krugman Says Stimulus Helped World Avoid Second Great Depression, Though Recovery Will Take a Couple Of Years

(AP)  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 Monday.

Krugman said the worst of the global crisis was over with economic and exports growth showing signs of stabilization. Still, recovery was likely to be "disappointing" as government spending wasn't sustainable in the long-run and unemployment rate still lagging behind, he told a two-day world capital markets conference here.

There isn't likely to be any "Phoenix-like" recovery such as in the 1997-98 Asian financial crisis, where the 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," Krugman said.

Asia is likely to see a faster rebound, than the U.S. and Europe, partly driven by the recovery in manufacturing exports, he said.

In the clearest sign yet that the recession may be ending, the U.S. Labor Department last Friday showed the jobless rate in the world's largest economy dipped for the first time in 15 months while workers' hours and pay edged upward.

It said a net total of 247,000 jobs were lost last month, the fewest in a year and a drastic improvement from the 443,000 that vanished in June. Still, the job market remains shaky. A quarter-million lost jobs are a far cry from the employment growth needed to put the national economy on solid footing.

President Barack Obama has urged Americans to be patient and give time for his $787 billion stimulus package of tax cuts and increased government spending to take hold. Most of the money will flow in 2010.

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

Krugman, who teaches at Princeton University, won the Nobel Prize in Economic Sciences last year for his analysis of how economies of scale can affect international trade patterns. He also writes columns for The New York Times.

He said there was a need to restructure the global financial system and impose tighter regulations to avoid a repeat of the economic crisis, but expressed concern that the momentum for reforms appeared to be easing.

"We do not have the political will to do that just yet ... I suspect clever people can still make a lot of money from the financial system in the next few years," he warned.

Earlier, Malaysian Prime Minister Najib Razak urged regulators worldwide to jointly create a compatible, sustainable and effective surveillance system to prevent future market crashes. These include keeping a close eye on risk-taking activities and having a common procedure for intervention if there are signs of irrational excess, he said.

"Over-reliance on self-regulation is a mistake," he said. "Global regulators should err on the side of investor protection and financial stability rather than rely on a 'buyer beware' regulatory regime."

Singapore's Finance Minister Tharman Shanmugaratnam and Hong Kong Secretary for Financial Services and the Treasury K.C. Chan warned against being too hasty, saying greater regulation of financial institutions mustn't be at the expense of stifling innovation and growth.

[mejordelahistoria]

who should we listen to, a nobel prize winner in economics? or a right wing ignorant nut product of the republican party's idea of education known as "no child left behind"?
We are recovering because we are reducing the number of high school dropouts we have in iraq saving us about 80 billion dollars every few months. Hopefully we can end the operation in afghanistan soon enough also so we can stop the bleeding of our economy completely and start working on recovering our constitutional values and freedoms taken away by the ashcroft, bush and the other traitors who supported the taliban in the 80's. In a few years we will start coming full circle and enjoy the times we had during clinton's presidency.

[Lawyers-Guns-n-Money]

by specialty8 August 10, 2009 5:09 PM EDT
You don't happen to live in the Chicago ghettos do you? You know Obama, Blago, Rev Wright, Renzo...
=============================================================

Renzo -- Stimpoli's Italian roomate.

[Dr Newel]

There is the old saying of what to produce, whom to produce it for and how to produce it: Guns or Butter? The U.S. can only produce X amount of things and if we spend too much effort, time, and money on Warfare, then the other things go lacking. It may be that all of the other stimulus money went down a rat hole, but the Cash for Clunkers program was the only thing that worked, and it was very cheap. The banks getting excessive fees for overdafts, and other excessive fees are counterproductive. Imagine college students on a 3 dollar a day budget getting charged 35 dollars overdraft for a $1.50 cup of coffee at the end of the month. Bank executives have lived the Life Styles of the Rich and Famous while on Government welfare amounting to billions. These bank executives should all be forced to serve soup in homeless shelters for one day a month equal to the California Furloughs. Bank executives in San Francisco live in $300,000.00 a month apartments downtown - sick.

[devilfly1]

Very Interesting story.

There are 300 economists in the world.

Why is not there a a single solution?

Check out the book called "Eco-Spasm". I considered this a good information.

Yes, there will be a solution. It might take forever.

[devilfly1]

Very Interesting!

Did you know that there are only 300 economists in the world?, Why is not a single solution to the Recession, which we are currently experiencing it?

Check the Eco-Spasm book? It is a good book with a lot of informations and triggers.

Be prepared for the best and the worst. TSK!

[salmoc44]

There are many people who think the Health care bill has death panels in it and who are afraid that the gov't may start running Medicare who probably disagree with this Nobel prize-winning economist.

[zonkzilla]

"I am so sick of watching him and his arrogance"

We get your point. You are sick of that arrogant "negro" thinking he is as good as a white man and not some shoe shine boy. We get it already, you hate black people.

[zonkzilla]

Please Nissan, can you start selling your new affordable electric car sooner than next year?
PLEASE?
I am sick of the gas price manipulators using "good news" to jack up prices and rip us off.
As soon as I can get an affordable electric car my gasoline car is heading for the crusher. I have had enough.

[zonkzilla]

Oh great, now because of that guy's statement the Wall Street manipulators and billionaires will raise gasoline prices to $3.00 in a week. It has already gone up .25 a gallon in a few days because unemployment has slowed down.
Thanks a lot.
When will those people learn to keep their mouth's shut?

[jakedog030]

Krugman is a perfect example of a liberal elite. He has never run a business, never created one single job and has never made anyone wealthy other than himself; yet some liberal pinhead at the Nobel Institute gives him the Nobel Prize because he's a socialist-leaning liberal. He really should've won the booby prize, not the Nobel Prize.

[notsouthern]

YOur savior of thieves GW Bush did not create one US job in his first term as the worst president in US history. Then self-centered southern fools like you voted for him again.

[presjfk]

Maybe there is a recovery in sight, maybe not. I certainly want to believe it.

But there is no doubt that we as a nation have done a great many stupid things that no other nation has ever done!

- Sending our factories and jobs overseas.
- Allowing massive trade deficits, not in the interest of our country but in the interest of corporations to send trillions overseas, much of it to China.
- Being energy dependent on our worst enemies and sending trillions overseas.
- Allowing foreign nations and corporations to lobby our government and outright buy our politicians.
- Allow millions of illegals to work, go to school, buy homes, get mortgages, get licenses and more all without the rights as citizens to operate and live in our country.
- Spend $100 bill more each year on the military than ALL OTHER NATIONS COMBINED!

Our economy may recover according to economic indicators but until these problems are solved, we will be a declining economic power, offering less for future generations than those that came before.

We have squandered our wealth and promise for a better life.

[notsouthern]

Obese southern whites drive up the overall national average cost of health care by over 3%. The corporate middle insurance man drives up the overall cost up another 4%. This status quo is what the obese southern whites want to maintain.

[not_fooled_by_Righties]

by brownnosingmedia August 10, 2009 12:04 PM EDT
Hey stupid.. Obama's stimulus has only spent 12%.. he has saved Paul Krugsman job....so he has to be talking about the great Bush Stimulus that saved the economey

Let's see some facts and figures to back up your assertion. But alas, there is no evidence of what you assert is true.

[nextgenman09]

Krugman may be a Nobel prize winner, but the be ingredient he's ignoring is that the Mentality of those that caused this - Big Business RINOpublicans - hasn't changed. This isn't over by a long shot.

[specialty8]

That will be Obamas real problem before long. After the beating China gave him last week for wreckless spending the bills will come due.

[notsouthern]

Republicons, the party of bitter southern and obese whites were out en masse last week after their fellow southern scumbags that ran John McCains campaign into the ground began making robocalls to their braindead southern base, encouraging the obese to get out and make death threats at last weeks townhall meetings staged all over the land of southern DixieCrap.

[specialty8]

You don't happen to live in the Chicago ghettos do you? You know Obama, Blago, Rev Wright, Renzo,and Ayers stomped around.

[lamdepressed]

The only long-term solution will be to bring down the American wages to the level Chinese receive today. That way we could be able to bring back the manufacturing that once was the envy of the planet. It took more than 30 years to ship the manufacturing abroad, chasing slave labor and it will take another 30 years to bring it back, lured by the slave labor at home. That may have been the long term plan after all

[Stevenapoli7]

Can we get a normal Austrian school of economics expert chyme in. Krugman is a freakin' socialist.

[cs4466]

Poor poor bitter neocons really hate it when President Obama is right.

Great job President Obama!!!

[specialty8]

What was he right about? Supporting the Bush TARP money?

[cs4466]

Yup, and expanding on it - turns out it was the right solution. Poor Bush just didn't get anything right til after he left office!

[specialty8]

So will you be shoping at the banks parking lots when all these new cars for cash for clunkers come rolling in? Wonder what Obama was thinking on this one? Did he not wonder why somebody would be driving a clunker to start with? Could it be they could not afford a new one? I see another bailout on the way over this 3 billion dollar mess to pay car payments off.

[cs4466]

Going for an electric car in 2010 or 2011. My 2003 Dodge Intrepid doesn't qualify as a clunker I don't think. And plenty of people drive older cars but can afford new ones.

[lovegetpeace]

Folks,
If the Republicans succeed in stopping Health Care Reform this year, then please write to President Obama to support Congressional Democrats whom cannot wait to call for several Independent Commissions and Special Prosecutors to Investigate and Probe all Unconstitutional acts of Ex-VP Dick Cheney and Ex-President George Bush. Bush and Cheney belong in Jail. No need for President Obama to be Mr. Nice President.

http://www.time.com/time/politics/article/0,8599,1912297,00.html?cnn=yes

http://ga3.org/campaign/btcpetition?qp_source=btc_aw

The Republicans need to taste a good Fear of their own. Let's keep the Congressional Republicans very busy defending the previous Administration.

Please help spread the word around like cancer. You have my Explicit Permission to copy this idea for your own use. I refused 'All Rights Reserved'. I refused all 'CopyRights'.

[specialty8]

Is this another one one of those priceless moments of Obamas? "if we don't slam the stimulis through for me to sign, unemployment might reach 8%". "Pay as you go". "shape up America" me and poor ole Joe foot in his mouth Biden are going to have a big burger and fries". "Me and Turbo Timmy are FURIORS of all the new AIG millionariers we created". Even you libs had to laugh at this pack of lies.