The financial tsunami, the United States economy is not out of the trough? Europe loan crisis will not be dragged down the global economy at the end of the second exploration? what is in the global economy where this series of questions that have always been economists and leaders talking about the focus topic.
The Nobel economics laureate, the New York Times columnist Paul Krugman-(PAULKRUGMAN) you upholding its pessimistic point. On June 27, published column, Krugman expressed for some countries too soon expand fiscal austerity policy concerns, says policy-making may trigger economic history of the third meeting of the great depression, and noted that the millions of unemployed people will pay for policy-making.
In the third time in the early days of the great depression
Referred to the great depression, one might immediately think of film master Chaplin's representatives — "modern times". "Modern times" to the end of the 1920s the world economic depression made a profound depiction, impressive.
Economic recession is widespread, but the great depression was very rare. Economic history only twice the recession was widely described as the "great depression". The first is the 1873 after the economic panic into deflation, and market instability period; the second was in 1929 to 1931 financial crisis a large number of unemployed persons to employment in difficult times.
Krugman points out, whether it's 19th-century long recession or depression of the twentieth century, they have not occurred in times of economic recession. On the contrary, that contains a cyclical economic growth, but the economic improvement is not sufficient to cover the initial damage economic recession, "but currently, I am very worried that we are in the third stage of the great depression. Today, it's closer to the 19th century experience long-term depression period, although the situation is not like the great depression in the 20th century as severe, but the cost of the great depression, the global economy, especially for the millions of people affected by unemployment problems, remains huge. ”
Decision-making errors lead to depression
The Krugman seems to be that the third great depression is caused by wrong policy decisions. World Governments now expressed concern about the excessive inflation, and in fact, the real threat is from deflation; leaders in promoting the need for tightening the expenses, but the real problem we face is the lack of expenditure. "This all weekend so deeply disappointed by the Group of 20 Summit were vivid manifestation. ”
Since the financial crisis erupted, Krugman has been advocating for Governments in the implementation of large-scale economic stimulus plan to help the global economy from total collapse. In fact, at the end of 2008, 2009 and even this year, Governments have implemented a series of scale amazing economic stimulus package.
"And predecessors in the face of financial crisis increases interest rates, the fed and the ECB in this crisis period are lowered interest rates on a large scale and positive measures to support the credit markets, and the Government in the face of economic downturn when trying to balance the budget, the Government choose wisely a deficit level rising. allowed It can be said that the financial crisis-induced recession has ended last summer. "Krugman points out.
However, in Europe and the United States unemployment, particularly long-term unemployment remains high, and there is no indication that the rate of unemployment in the short term to decrease rapidly. While at the same time, the United States and Europe seems to be moving toward Japanese deflation dilemma. Faced with the harsh situation, one may expect policy makers aware of them in promoting recovery done enough. But the fact is that, on the contrary, for the past several months, many countries are increasingly concerned about the policy makers of fiscal austerity plan and tend to follow the traditional concept of a balanced budget.
Krugman said that States if the early implementation of fiscal austerity plan and exit the stimulus, then buried for this policy is the only one of the millions of unemployed people, many of them may have to last for a few years in unemployment status and even some people never go back to work.
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