The Third Depression - Krugman

NY Times columnist, Nobel Laureate and LSE and Princeton prof Paul Krugman penned an opinion article about our world economy today. 

He describes with some alarm the fact that government fiscal policy and monetary policy from central banks is reflecting a balanced economy stance in a situation where the economy is inherently imbalanced.

Krugman concludes that without greater austerity (alike what was seen in Greece and Ireland) the world will pay by deflation and organic decay of each economy. 

Looking at the glossary of the Economist.com a depression is termed a period of prolonged decline in output (greater than 10% which is termed a slump). 

The figure below and the following article from the IMF show a case in point - there has been a steep decline in the world economy - and more in the developing economies. 

Figure 1

Are we in a Great Depression? The figures above are not at 10% lower for a prolonged period of time, but they're not pretty. Recession, Slump or Depression careful watching is required. 

Got an opinion? Make a comment - click below. 

What's Up Jono? www.whatsupjono.com Finance, Breaking News, Opinion, Charts.

 





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