Careening Toward a Depression: Save the Economy, Hike the Deficit!

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Tue May-31-11 10:33 PM
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Careening Toward a Depression: Save the Economy, Hike the Deficit!

Weekend Edition
May 27 - 29, 2011

Careening Toward a Third Depression
Save the Economy, Hike the Deficit!
By MIKE WHITNEY

How do you light a fire under Congress? How do you get these guys to do what they're paid to do?

We're 5 years into this slump, millions of people have lost their homes and jobs, 44 million people are on food stamps, the economy is in the tank, and congress won't lift a finger to help. What's that all about? You'd think that the revision in GDP and the uptick in unemployment claims would set off alarms on Capitol Hill. But it hasn't. They just shrug it off and move on. What do they care? They get their fat paycheck one way or another, so what difference does it make to them? Besides, if they play their cards right, they'll nab a 6-figure lobbying job as soon as they retire and spend the rest of their lives working on their chip-shot and swilling single-malt at the club with their moneybags friends. Doesn't that piss you off?

Congress just doesn't seem to "get it". They don't understand what people are going through; how maxed out they are. We're in the middle of a Depression and all they want to do is score points playing political circlejerk by stonewalling the debt ceiling or jacking-around with Medicare. Meanwhile, unemployment is on the rise (Initial claims rose to 424,000 on Thursday), GDP is falling (1Q GDP revised to 1.8%), durable goods are down 3.6 percent in April, the market is topping out, business investment is flat, Europe's on the ropes, Japan is in a historic slump, China is overheating, the output gap is as wide as it was 6 quarters ago, bank balance sheets are bleeding red from falling home prices and non-performing loans, and the housing market is crashing.

So, excuse me for asking, Mr. Bigshot Congressman, but would you mind lending a hand? A little stimulus would be nice. You know, just enough so we can get a job and feed the kids. And if you're worried about the deficits; don't be. They're not a problem. That's just more GOP scaremongering.

Please read the full article at:

http://www.counterpunch.org/whitney05272011.html

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Third Depression Watch
by Paul Krugman
May 25, 2011

Last year I warned that we seemed to be heading into the �Third Depression� � by which I meant a prolonged period of economic weakness:

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline � on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost � to the world economy and, above all, to the millions of lives blighted by the absence of jobs � will nonetheless be immense.

Brad DeLong points us to Macro Advisers, which has now downgraded its estimates for second-quarter growth. As Brad says, these estimates now suggest that we have now gone through a year and a half of �recovery� that has failed to make any progress toward closing the gap between what the economy should be producing and what it�s actually producing.

And nobody in power cares!

http://krugman.blogs.nytimes.com/2011/05/25/third-depression-watch/

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