Depression Redux?

An important op ed from Paul Krugman on Sunday suggested that we may be on the road to a depression: http://www.nytimes.com/2010/06/28/opinion/28krugman.html?ref=general&src=me&pagewanted=print. While the worst of the current financial crisis appears to be behind us, we still have historically high long term unemployment, rising debt and seem to be heading toward an austerity program when it is clear we need to further stimulate the economy instead. As Krugman argues, "In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy." To return to a rather obvious point, "if we do not learn from history, we are bound to repeat it." What appears to be happening at present is repeating the mistakes of Herbert Hoover and the other liberal, laissez-faire politicians and economists of the 20s and early 30s. Rather than heeding the clarion call of looming catastrophe, we are adhering to tired, orthodoxy led by neoliberal economists and politicians who refuse to admit they are wrong.

Lest us forget, these are the same economists that all but destroyed the Russian economy (before it stopped listening and recovered), that created the Asian Financial Crisis, whose policies have severely damaged Argentina and other countries in South America and Africa (where poverty is higher today than it was 30 years ago), who can be blamed for the S&L crisis, the two Stock Market collapses and the financial crisis of 2007. But we just keep listening, with a tone deafness that would be extraordinary if it didn't mean that millions in the Europe and the U.S. and billions across the globe were not about to suffer under the absurdity of the choice. It's as if world leaders across the developed world have completely lost their minds and their collective blind faith in markets renders them incapacitated to be reasonable. If we don't start listening to sensible voice, like Krugman (and Obama to some extent), we are headed toward the slow, steady and irreversible decline of not only the United States, but probably the entire West. While some might cheer that decline, I hope someone comes to their senses before it is too late . . .