Recession Way Not Over: Krugman


Paul KrugmanNew Orleans To be clear Paul Krugman, the Princeton-based, Nobel prize winning, New York Times writing columnist has a dog in this race:  he argued that the stimulus package to pull out of the recession needed to be way bigger from the get-go.  But, looking past the “I told you so,” he is dead on in saying that the Federal Reserve’s Bernacke and Treasury’s Geithner are totally doped and drinking their own Kool-Aid when they pump out the press releases saying essentially that the recession “is over” and “we’re coming out of the recession.”

I have to admit I have a couple of dogs in this race as well, since I’ve argued that the limp wicked, ham-handed, banker-driven no-home-mortgage-modification program was forcing foreclosures, robbing citizen wealth, and deepening the recession in countless communities which had been engines of group in the early 21st century, and that the lack of new jobs and weird claims of jobs saved were political tropes not recession killers.  Krugman is on the same page.  He argues that we need to (1) “revamp” the “deeply unsuccessful attempt to aid troubled homeowners”

(2) “use Fannie Mae and Freddie Mac…to engineer mortgage refinancing that puts money in the hands of American families” and (3) deal with China on “currency manipulation” which is really out of my league but I’m betting with Krugman on that one, too.

He bells the cats for cowardice, no plans, and bureaucratic cover-ups.

I suspect the real issue is simply politics as we get ready for the post-Labor Day full tilt boogie on the mid-term elections and political control in DC.  Treasury and the Federal Reserve may be inept and chicken but they are not stupid, and everyone in the Beltway must realize that it’s still “the economy stupid.”  They probably believe that it is better to spin and pretend that there’s a recovery at work to push some points up in the polls, than admit that they have been bankers’ bitches and are letting the pain continue pulsing rather than really implementing the cures.