Krugman: ‘Reasonably High Chance’ the Economy Will Contract

Don’t worry, Barry the Lyin Hawaiian says all is well.There is a glimmer of hope though as the only reason Slugman won this crappy award was like ABC’s Hero BO a lib. Be a lib win awards from
lib award groups,easy as that.

Paul Krugman was the one who supported a government spending to stimulate the economy until the deficit hit 10 trillion or more if I am not mistaken. I am no economist but I do have a common sense to realize that deficit that high will never make the recurring recession go away.

Wait a minute Paul Krugman! Just because Nobel-winning economist Joseph Stiglitz thinks that there is a significant chance the economy could contract in 2010, what makes you think you’re any smarter than Turbo Tim?

Even us non-Nobel prize winning simple minded business people do not like what we see coming up ahead for 2010. We have to get through the commerical loan issues at the banks, have some knowledge as to what NEW TAXES and job killing regulations we are going to get and finally the government at some point has to get out of the home loan business.
all of these are going to be a drag on the economy.

Oh, well if the former Enron economic adviser Paul Krugman says it’s true, then it must be.

We are witnessing first-hand that Keynesian Economics–a theory that the government can stimulate economic growth by intervening in the private sector–is an absolute FAILURE. And yet Obama, Reid, and Pelosi continue to pile on more and more debt, even as Americans are screaming at them to stop.
There’s a point where foreign investors will no longer buy our debt. China is already warning they are reluctant to buy more of our debt. If that happens, we can either print money to service our debt or we default. We’ll print money. The resulting inflation will devastate the working poor and middle class.
Want a glimpse at our future? Look at Detroit.

I would think that the Obama administration is not having a “duh” moment with Krugman’s comments.
The Obama administration has spent a boatload of money in the form of the Stimulus plan to get the economy on its collective feet as it were. The idea was to reach out past 18 months. If you are going to spend up to $800 Billion it seems to me you might want to get some mileage out of it.
That’s a guess on my part but, then again, we have moved from treating it all as monopoly money to the realization that in spite of the unlimited supply of the stuff it actually has real value in the world (at least for the time being).
The rest of us may be saying “duh” – I’m thinking that the Obama administration is going “ut oh – this is not a good thing.”

“Stimulus = economic growth = jobs = tax revenue = shrinking deficit.”
LOL!
Google “US National Debt Clock Real Time”

Susie Madrak – I must disagree with your last post. We can only keep this going as long as people credit us funds based on the good faith that we will pay of our debt someday with money that is not too debased.

Paul I’m going to disagree with you on this one.
I highly doubt that the economy will contract.
In fact I beleive that the economy will do exactly the opposite.
Saving has increased to the highest point in over a decade. People aren’t going to save forever. Eventually people will cave in and spend more. The stock markets are back up by 40% as the stock markets get higher and higher up people who depend on those funds for retirement will become more and more lax on their hoarding of those funds and start spending more freely.
This poorly written article could have pointed out why Paul stated this other than it being a gut feeling.

I don’t need a Nobel prize in economics to predict that this economy ain’t goin’ anywhere as long as Barack Baloney continues to spend money we don’t have on nonsense programs, like the alleged “health care” bill, cap and trade hooey, and “stimulus” plans that are in reality payoffs for his supporters.
Ask yourself: Why would any business be hiring, with new regulations and taxes about to be foisted onto them? Why would they expand when consumer spending is down? Why would they keep employees on when their profit margins have been drastically reduced?
Paul Krugman is an idiot. BUT – - an idiot with a Nobel prize. Sound familiar?

Who ever “Jenn” is … is spot on. read all the posts
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That is hilarious, as I did browse through the posts. Its actually supply side economics that has proven not to be the cure for all ills, the answers to everything, particularly deflationary recessions– and those who understand economics recognize the need for flexibility when it comes to applying theory. I was glad to see Jake quote Bruce Bartlett today. Those on the right who cling to a rigid ideology rather than being practical and applying a full menu of ideas to present circumstances, should familiarize themselves with his observations.
A lot of the thinking in the comments represents exactly what the Republican commentators on the show today were talking about when it comes to their prediction that conservatives will totally misread the tea leaves,and get the wrong message from possible election results in 2010. Not the sharpest knives in the drawer.

Obama has frightened business leaders to the point that they will not hire until there is a clear change in policy. That might come in 2010 if the Democrats lose control of the house or it might come in 2012 when Obama loses his reelection bid. Either way, 2010 will be a very difficult year because of the lack of confidence in the current administration.
For those who track shipping and freight as a harbinger of future economic activity you no doubt know that we have not seen any recovery signs yet; all we have is a temporary sugar high caused by massive deficit spending on the federal level (last quarter GDP was +2.2 with +2.4 being from deficit spending).
Finally, 2010 will be a year where the second leg of the mortgage crisis hits. We will also see commercial real estate failures accelerate.
Obama has done nothing to prevent the impending crash and is in fact actively pursuing policies that are designed to re-inflate the bubble in real estate that causes the underlying problems in our economy.

Consumer confidence is so badly shaken that I can’t see a real turnaround during Obama’s tenure. Business is permenantly learning how to do more with less, and fewer. The Middle Class will have to lower their standards for the foreseable future. Retirement will be remembered as a quaint concept of yesteryear, except for those few with a boarding-house reach and few restraints.

Obama will have a second term, and Democrats will win more seats in 2010. The American people, in the majority, are astute enough to know that this President has made the hard choices. He inherited massive problems, and rather than try to please his constituents to assure re-election he chose America over politics.
It does not matter what the right screams, or what they think as they are now irrelevant. The Republican philosophy and ideology FAILED massively and has pretty much destroyed America. Do Republicans seriously believe we will all fall for their lies and misrepresentations again? Not likely!
There are many Liberals and Democrats who are disappointed that the ideals they believe in have not been as forthcoming as they wished, but once the dust settles they will see that the steps that have been taken, despite Republican obstructionism, are a giant step in the right direction, and that giving Obama another four years to continue cleaning up after the Republicans is the smarter move.

realman…You and the other Conservatives can continue to lie to each other. Obama can never do anything right in your mind because you are still part of the failed conservative philosophy. Basically, what you think does not matter.

Obama has frightened business leaders to the point that they will not hire until there is a clear change in policy. >>>>>>>
If we dont like what you are doing we will come in with our czars and take over. That emits confidence doesnt it?
>>>>>>>>>>>>>>>>>>>>>>>>
Obama has done nothing to prevent the impending crash and is in fact actively pursuing policies that are designed to re-inflate the bubble in real estate that causes the underlying problems in our economy.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
I agree completely. Never have I seen someone in such a hurry to make a bigger mess than we were just in.

realman1963 | Dec 27, 2009 1:34:38 PM
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Democrats will increase their numbers in Congress to the point that Republicans will start talking about revolution because idiots as they are, they hate to accept the fact that they are nothing but losers. Since Obama took over they have been undermining the process of governing.
They had the country in their hands for eight years and still they refuse to rcognize that they run the country into the ground. Do you really think the American people will give you a sencond chance?

It is amazing how the Right continues their lies…
These results are from real Clear Polotics Poll Averages. Please note how the poster who referred to Rasmusseen lied about the results. A typical conservative:
Obama Approval Ratings:
RCP Average 12/6 – 12/23 – 49.5 45.1 +4.4
Rasmussen Reports 12/21 – 12/23 1500 LV 44 56 -12

Krugman has been wrong on nearly every count since President Obama was elected. Krugman has been against the administration ever since they didn’t annoint him the economic guru for the country. The economy may falter and if it does, he’ll probably take credit. If it doesn’t, he’ll take credit for warning everyone. He’s a economist….they’re good at predicting the past, but lousy at predicting the future.

Hey Rob, 50% of Detroit is unemployed and they have a record number of homeless. Go poll them.

tierra..
I would be glad to poll the auto workers of Detroit. They know where they would be without Obama. 100% unemployment.

A real patriotic American that damaged this country would apologize and try to right their wrongs. Does this sound like the Republicans/Conservatives to you? Conservatives continue their failed philosophy and lie about everything.
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It’s too bad Bush couldn’t have left the country in better shape.
One would like to think that as a President you leave the country healthier than when you were elected.
Unfortunately, it was exactly the opposite with Bush and his Republican administration.
The national debt was doubled, the deficit was skyrocketing, and the economy was in virtual free-fall collapse.

Must be difficult for the government because if they do give the people cash they’ll turn around and buy Chinese garbage — its the only choice we have for most products.
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There actually are lots of American choices – g**gle American made products, or something similar and you’ll have lots to research.
Regrettably, not many Americans really think about buying national products.

Obviously poor reporting, but my guess is Krugman’s prediction is based on his view that a 2nd stimulus is needed (way too early to even discuss)and on his alarmist tendencies-which sometimes are correct-SEE Bursting of Housing Bubble, Now for the facts & the future: consumer confidence is increasing (UofM survey), unemployment rate has fallen, GDP up 2.2% in 3rd, expected to be up 3-4% in 4th, well over half of stimulus has not even been spent yet, rollback of over 80% of amount of Bush tax cuts affects less than 10% of taxpayers, has little effect on small businesses as only their owners pay taxes on what they choose to take out of the business for thmeselves (and only affects owners who take out $250K+ for themselves, $150K+ if single); big business has 50% more cash than ever-adjusted for inflation-so it will either pay down the deficit or start spending it. As for the dollar, its recent rise, altho likely temporary, shows it’s not in free fall, its general weakness has helped to reduce trade deficit, and as almost all economists view deflation as a greater threat than inflation, the real value of the dollar is stable. 3Q GDP shows Keynesian economic theory works, and the Baltic Dry Index has risen from below 1000 to 3000 this year-with most of tis recent decline caused by the rising dollar. Healthcare legislation will reduce costs for those small businesses already providing coverage for employees, but not by nearly as much as would be the case with a public option. My prediction: the rate of growth in the 2nd half of 2010 will slow to about 2% from its 4% rate in the 1st half, unemployment will drop to about 8.5%, and Dems will lose fewer than avg seats in House in off-year election, but retain comfortable majorities in both houses.

You called Paul Krugman an idiot!? Where does that put someone of your economic calibre?*********
Paul Krugman is an idiot. BUT – - an idiot with a Nobel prize. Sound familiar?
Posted by: OverTheCoastline@@@@@@@@@@@@@@@@@@@@@@
kRUGMAN, AN IDIOT! rotflamo @ U.
secreg_756

Happy to see Stephanopolis going… How about Terry Moran for Georges Job? Terry is top flight! I am with tierra. Obama cannot cut and/or tax the influx of Chinese goods even though it would help immeasurably. Larry Summers would immediately put a real gun with real bullets to our poor President’s head with the real intent to kill the poor fellow. Failing the first option Geithner would. Funny what people will do for money.
I recommend a grass roots boycott of all Chinese goods. Hard to do but possible. You may not be able to be a purist and get it all but you could get a lot of it. Keep a journal and you may be surprised that you can get over 50% of your purchases from the U.S.A.
The Chinese are not playing on a level playing field. Their currency is inflated and will stay as such no matter how much we complain. There is no way in the world that I can compete with an 18 yr. old Chinese worker that works 6 days a week for $2.00 per hour. Boycott the Chinese and restore manufacturing jobs in our country. this is the only way I can see us getting a job filled recovery.

Most of what stopped the GDP from falling a fourth straight quarter was the infusion of money into the economy by the government.
Technically, we can fall back into a recession for 9 more months. Recession is defined as 3 consecutive quarters of no or very low growth. Whew, 9 recession free months coming up, really?
Banks have plenty of money to lend. Why should they? Using money to make money is a better bet and creates higher potential returns than lending. That’s is why it’s so hard to get a loan. Lending money is not the best way for banks to make money. Glass-Staegal act saw that and for many years kept brokerage houses from being lenders and Banks from selling securities. Thank Bill Clinton very much for allowing the G-S act to be stricken. Also much thanks to Lindsay Graham and Bill Clinton on behalf of deregulating the commodities industry. Prior to deregulation commodities could only be traded while the NYSE was open. Now it’s a free for all and commodities are traded 24/7 world wide. talk of lack of supervision. This was equivalent to handing a bottle of Jack Daniels and the keys to the Corvette to your son. Nothing good will come from it. The stock market is an entity unto itself. It does not reflect the real economy in the world. Wall strreters take OPM and turn that into great wealth fro themselves and in most instances their investors. Wall Street does not create jobs. Nor is it an indicator job growth is coming soon. Wall Streeters, like Bankers make money from money trading in different investment vehicles at different times. I believe Krugman is absolutely correct. Unless, Obama throws another Trillion into the economy we are headed down. Remember it was WW11 which took us out of the 2ND great depression. After FDR died. Hoover cut the cash spigot and had it not been for WW2, who knows what would have happened.
SECREG666

Shame on Krugman. He of all people should know that it is leadership that generates the enthusiasm and creativity of the people. In that he is a personal failure. Krugman’s shifted too much to the right in an attempt to maintain his little seat as a Sunday Morning talking head. And Newt Gingrich, what a cow. Remind me again what he’s in charge of and why we should listen to him about anything?

“Surely Democrat plans to raise taxes”
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Democrats will probably have no choice.
The previous President cut taxes and grossly overspent – plunging the country further and further in debt every year of his presidency. The national debt was doubled on his watch.
This national debt will have to be paid for by taxes – where did Bush think it would come from?
Then the economy crashed on his watch.
(Dealing with the near depression left by Bush is an entirely additional matter.)

Here we go again, lets blame someone else, namely Bush. In reality we can all blame ourselves to a certain extent, we had a cooperative government looking the other way while banks made crappy loans;real estate agents loved it,builders and suppliers loved it,developers and bankers loved it because uncle sam was guaranteeing the loans and they could make a killing by packaging them as “good stuff”, with a US Gov guarantee. Then you have people sitting on the board of fannie and freddie, people like Rahm Emanuel getting tidy fees for his services, Senators getting “sweetheart”loans and other politicians using this “easy money” as a way to buy votes.
So as those who wait around for healthcare 4 years from now tell me how you like paying for something in advance before you get it and how you like Congress passing laws that “just don’t apply to them” and more importantly how do you like bankers getting bailed out while many do without jobs and a means of support.

The socialist tendencies of Obama and the Democrats are going to seriously wreck the American economy. The 2010 elections, when the Democrats lose their majority, will put the country back on a path to sanity.

Krugman has been wrong on everything he suggests to Obama. He has zero credibility. The reason that the economy is a disaster is the deficit spending which Krugman continues to recommend including more deficits with a second porkulus package. AS long as Obama does anything Krugman recommends that economy will continue to fail.

BTW, the Democrats had a simple majority and came to power in 2007. Nothing they did could have been done without help from a Republican President. They also lacked the votes to stop the constant filibusters of the Republican.

Ummm..for the one who posted that the stock market rising was a sure sign we are out of it, you are wrong. The Fed is printing money like it’s going out of style, that drives down the value of the dollar. When the value of the dollar goes down, prices go up and that’s the only reason why stocks are rising because it takes more inflationary dollars to buy the stocks now than it did before the bailouts and the stimulus and all the other crap they are spending our money on, not because the companies are more valuable now than they were then. Eventually, interest rates have got to go back up and when they do the dollar will strengthen and stock prices will collapse. They are reinflating the bubbles so they can burst them again later.

Our economy will have a chance at avoiding a nosedive when President Obama stops running around telling everyone how and when he wants to raise taxes.
He really should know better than that – its rule #1 in a recession not to raise taxes. So all he does is talk about it – same thing! He’s got everyone spooked and for good reason – at the rate he is spending there is no way he will be able to avoid raising taxes on everyone. Talk about one big re-recession when he does that!
I’m afraid we are into this mess for the long haul until Obama changes his gloomy tune, stops spending money, or is voted out to get a better Democrat in office.

The problem is that no one will resume business expansion and start hiring again if they think they are going to get gutted by taxes at any moment. It’s defensive posturing – and totally understandable given the constant threats by our commander in chief. What baffles me is how in the world Obama could possibly think people will hire when they have this big cloud looming over them?
The big problem with Obama and the rest of them is that they are more concerned with how they will be seen by history than they are concerned with with the welfare of us everyday slobs. We got talked in to electing a man who pretends to care, but acts quite the opposite – on other issues as well.
We need people in Washington who care about the welfare of the American people NOW! – and who don’t give a damn how history will portray them.

“Can’t find Tech workers here?”. Give me a break, since the tech bubble broke, I’ve had plenty of American Engineers leave the business because of the lack of work and outsourcing. Its not the lack of skills corporate American is complaining about, its what they have to pay for an American Engineer. H1B Visa guys are endentured servants, hoping for a chance at a green card.

Cheap foreign labor has taken millions of jobs from Americans right here in our own front yard. My company alone employed 30% H1B and other visa holding engineers. They were paying PhD’s from other countries what I was earning and I was not a degree holder. Now I’m unemployed, but I have worked for some of the very best BIG name companies on multi million dollar equipment for more than two decades.

redbat | Dec 28, 2009 8:22:28 AM…..H1 visas and legal immigration have averaged over 1M since 1965; however, prior to that the average was 250,000. If that 250K was re-instilled and illegal aliens were removed, how many unemployed Americans would go back to work?

Turbo Timmy begs to differ Paul!

Oh Bill, you gave yourself away: “Democrats and Blacks.” It all comes down to race with you people, doesn’t it? Keep it up. We’ll keep winning elections and the Rethugs will be just people like you.

Krugman really wants to have it both ways. He was the main proponent of Keynsian policy through the aegis of the stimulus package. Repubicans argued that there has never been an instance where Keynsian economics has been shown to work. Krugman got his wish and in fact he argued that it was not large enough. Well Paul they just passed the second stimulus package and suddenly your talking about a downturn in the second half, a bald faced admision that you are clueless as an economist. If your child is in Princeton yank him out of Krugman’s class. Not only will he learn bad economics but Paul will use his lectures to turn your child into a socialist. PS Paul the economy is a lot more resilient than you think. It will slow in the second half but growth will be positive.

Anyone who has any contact with the real world at all knows that the REAL unemployment numbers are far more than 10%, probably closer to 25%. The fact that our Government can openly lie to us and falsify figures without any repercussions is incredible. Our Country has become a collection of clueless people who won’t demand truthfulness from the authorities. The stock market keeps going up because of the stimulus money given to the Banks but the average middle class person has no extra money and is either jobless or in fear of losing their home or job. The Government issues a continual stream of complete lies about every major issue that is covered and verified by the Media and no one seems to know, care or demand action by Congress to investigate. We demand that a billionaire pro=golfer answer for aldultery but a politician can openly steal, lie and not complete ANY of the promises he was elected on. A small group of super wealthy individuals are gaining more and more control over our lives and finances and only a handful of people are aware of it. Ignorance has become the badge of the American people and greed and power have become the uniform that our Government wears. Truly, the majority of Americans are clueless, ignorant, in it for themselves only and greedy beyond human comprehension. God is being removed from all public places with the nodding approval of most people even as the Country disintegrates in proportion to the lack of God in our lives. Such a sad state of affairs, such a sad Government, such a silly population of people drowning in their own ignorance.

Just start another war of aggression somewhere! And increase the military spendings by 50%! … And keep grazing!

It never ends, does it. The Rabid Right foaming at the mouth and attacking everything in sight.
Hey, right-wingers. Pick up a history book and read about the conservative cabal controlling this country the last 28 years. Once again the right has run this country over a cliff, just like they did in the 1890s, 1920s and 1981-2008. Conservative fiscal policies fail every flipping time. A failed philosophy should be abandoned instead of insanely repeated. It will take a generation just to clean up the Reagan mess and another to get over the nightmare of Bush 43.

What about the high price of oil? When it hits $85 look for another serious contraction. Oil is running out folks. The idiots who think there is plenty are only dooming themselves to economic starvation. This country has 2% of the world’s reserves. During WW2 it had plenty to support the war effort, the same with the Soviets in Baku. That is why they won… We simply cannot support our military on the oil we have left. The economy needs to figure this out and sell the Suburbans and other energy consuming toys and find a product that might just delay a complete disaster…

Yep, I agree with this. You should also put most important key phrases in the Heading ( etc.) tags from what I’ve read.