Forget the crisis!, urges Krugman

[ddstory]

http://www.washingtonpost.com/opinions/the-speed-read-paul-krugmans-end-this-depression-now/2012/05/04/gIQALJl31T_story.html

The governments should finally start spending, Nobel laureate in economics Paul Krugman recommends in his new book End This Depression Now, where he sharply criticizes the austerity programs. So let's look a bit closer.

Comments

[dwer]

certainly, Austerity hasn't worked yet, and we know spending will.

[telemann]

Paul Krugman got it right in 2009.Bit by bit we’re getting information on the Obama stimulus plan, enough to start making back-of-the-envelope estimates of impact. The bottom line is this: we’re probably looking at a plan that will shave less than 2 percentage points off the average unemployment rate for the next two years, and possibly quite a lot less. This raises real concerns about whether the incoming administration is lowballing its plans in an attempt to get bipartisan support

[dwer]

Failure of Austerity: Ireland. Spain. Greece.
Success of Spending: US.

[htpcl]

Austerity is being proposed for Greece. Hence the Greek protests. Austerity hasn't been implemented in Greece yet, not for a long sufficient period to be able to say what its effects "have been", simply because it hasn't happened there yet.

I do think it'll be a disaster in Greece's case, yes, but saying "austerity has failed in Greece" is a bit like putting the cart in front of the horse. Or heating the frying pan before you've even caught the fish. Etc etc etc other stupid metaphors. :-)

[telemann]

Well some of the austerity programs have already taken effect, and they're impacting the Greek economy enough for even IMF officials to talk about that.

Poul Thomsen, a senior International Monetary Fund official who oversees the organisation's mission in Greece, also insists that, contrary to popular belief, Athens has achieved a lot since the eruption of the debt crisis in December 2009

[htpcl]

Indeed: they have begun to be implemented. There's no argument about that.

[telemann]

Since 2010, with some significant impact according to IMF officials.

[htpcl]

I don't know. It took us at least 5-6 years to really start feeling the effects of the 1997 currency board.

[telemann]

If the IMF doesn't know, let's ask Mr. Bean!

[htpcl]

:-)

[dwer]

I was under the impression that Greece was rioting because of the rest of the EU trying to impose FURTHER austerity measures in Greece. They've had significant cuts to spending already, no?

[telemann]

Yes, see the link above.

[htpcl]

They have, and they'll be compelled to have more, otherwise they'd sink. Which is not to say they can't try stimulus in the areas where it'd work, while simultaneously cutting in areas where they have to cut no matter what happens. The point I'm trying to make is, any policy requires time to have an impact, and to be able to talk of its results. We can't talk about its effects several months after it has been implemented.

[dwer]

I don't know that I agree with that.

[htpcl]

Fair enough.