08-11-09, 09:41 PM
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| Jedi knight
Join Date: Jul 2009 Location: IBF Age: 21
Posts: 1,816
Rep Power: 5 |  Great Depression 2.0 avoided but may revisit again
Noble Prize winning Economist Krugman have said Great depression had been avoided but it will revisit in near future as no reforms have been taken.
Read this humorous talk with him under quotes. Quote:
THE world has avoided a Great Depression 2.0 but it will take at least two years for the global economy to make a full recovery, Nobel prize- winning economist Paul Krugman said on Monday.
Krugman said in a speech to an international business forum that although the worst of the financial crisis was over, the world now faces a prolonged slowdown like Japan’s lost decade of the 1990s.
“ How do we get out? I think the technical answer is — God knows. We have a great shortage of role models,” said Krugman, a professor of economics at Princeton University in the US. Krugman said that in the past, swift economic recoveries saw affected countries export their way out of trouble, trading with countries with large surpluses.
“ Unless we can find another planet to export to, we cannot have an exportled recovery from this global financial crisis, which means we have a serious difficulty,” he said. Other possible solutions — consumer spending, business investment and housing booms are all unlikely to kick- start the US or world economy this time.
“ We seem to have avoided the Great Depression 2.0,” Krugman said, but added “ I do believe that full recovery is at least two years and probably more than that off.” He compared the world economic picture to a globalised version of Japan through much of the 1990s. Formally, Japan spent only pockets of its lost decade in recession, but as a whole it was a period of consistently slow growth.
Krugman said that to find anything comparable to the current woes, economists have to look back to the 1930s, when a global slump was brought to an end by a very large set of public works programmes known as World War II. “ Hopefully we’re not going to repeat that strategy,” he joked, adding that policy makers could try more stimulus programs, higher inflation targets and spurring business investment. “ We don’t know which of these things would work, so we need to try all of them,” he said.
Krugman also urged a restructuring of the financial system to prevent a recurrence of the crisis, with more effective bank regulation, and limits on the risk that important institutions can take on.
“ The general principle is that anything that in a crisis has to be rescued — like a bank — when you’re not in a crisis, has to be regulated like a bank,” he said. “ I have no confidence this is going to happen. In a way, the downside of our having managed to avoid a full repeat of the Great Depression is that we may have rescued the economy too soon before the political momentum for fundamental reform was strong enough to cause changes.
Which means I worry this is all going to happen again in the not- too- distant future,” he said.
| AFP: 'Great Depression 2.0' avoided: Krugman
PS: If this is related to Investment & Finance please move it here. |
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