Krugman: Things to Come - Political and Economic Outlook (Grim, but at least Obama wins in 2012)

[Kurt_and_Hunter]

This is an excerpt of a longish blog entry, so best to read the whole thing at the Link

Paul Krugman
November 30, 2009, 2:09 pm

Things to come

What’s going to happen, economically and politically, over the next few years? Nobody knows, of course. But I have a vision — what I think is the most likely course of events. It’s fairly grim — but not in the approved way. This vision lies behind a lot of what I’ve been writing, so it might clarify things for regular readers if I laid it out explicitly.

Start with the short-term economics. What we’re in right now is the aftermath of a giant financial crisis, which typically leads to a prolonged period of economic weakness — and this time isn’t different. A bolder economic policy early this year might have led to a turnaround, but what we actually got were half-measures. As a result, unemployment is likely to stay near its current level for a year or more.

And politically it’s hard to do anything about that. Those economic half-measures have landed the Obama administration in a trap: much of the political establishment now sees stimulus as having been discredited by events, so that it’s very hard to come back and scale the policy up to where it should have been in the first place. Also, with the apocalypse on hold, the deficit scolds have come back into their own, decrying any policy that actually involves spending money.

The result, then, will be high unemployment leading into the 2010 elections, and corresponding Democratic losses. These losses will be worse because Obama, by pursuing a uniformly pro-banker policy without even a gesture to popular anger over the bailouts, has ceded populist energy to the right and demoralized the movement that brought him to power. Despite all this, the midterms probably won’t give Republicans the majority in the House. But the losses will be big enough to deny Obama a working majority for any major initiatives in the rest of his first term. (My guess is that he’ll be reelected thanks to the true awfulness of the Republican nominee). Since Republicans are dead set against any of the things I think could help pull the economy out of its rut, this means more economic stagnation.

Along with this will come a process of defining prosperity down. All the wise heads will tell us that 8 or 9 percent unemployment — maybe even 10 percent — is the “new normal”, and that only irresponsible people want to do anything about the situation. So what I see is years of terrible job markets, combined with political paralysis...

http://krugman.blogs.nytimes.com/2009/11/30/things-to-come/

[NRaleighLiberal]

1. It is being "unrec'd", but I see a lot of potential accuracy in this scenario.

I think that for whatever reason, American leadership is in a very ineffective period - hamstrung by politics, greed, lobbying - and without the courage (or political capital) to do the things that would help. My view - we are in a long period of mediocrity or worse. Add the continued war onto it, and all I can say is I am glad I am 53 instead of 23.

[phantom power]

2. "defining prosperity down"

10% is the new 5%!

Whee!
:woohoo:

[Kurt_and_Hunter]

3. I am already feeling that.

Lot's of talk about how rosy 8% unemployment will be.

I predict that a few years from (or even today) that if you ask people to guess what unemployment was in 1997 they will guess about 7%.

"The Clinton years were pretty good economically so it must have been a lot lower than today... what, like 7%?"

[RUMMYisFROSTED]

4. Aka: Squeezed like a sponge.

[Nicholas D Wolfwood]

5. I suppose that's possible.

But I do disagree with the premise that scaling up the stimulus policy at this point would be hard to do. Label it a jobs bill that helps small businesses and directly creates jobs through more public works projects and Republicans will find it impossible to filibuster without losing whatever ground they have gained. And if they do, they've created your 2010 and 2012 campaign agenda for Democrats - "you wanted health care, you wanted jobs, and Republican obstructionism gave you nothing." It may not create new seats, but it will strongly mitigate losses.

[freddie mertz]

6. Krugman presents a bleak picture, but it is more than plausible.

We need to keep applying the pressure and forget the "Obama can do no wrong" mantra for there to be any "hope" at all.

[Kurt_and_Hunter]

7. Krugman's closing paragraph:

"What can the rest of us do? Progressives have to keep the pressure on. The time for trusting the administration to do what’s necessary is past — all indications are that it won’t, not on its own. But maybe, just maybe, the president can be brought to see the danger he’s running by playing it safe."

[freddie mertz]

8. It looks like we will have opposition if we try to promote that kind of activism here.

Noticed?

[Kurt_and_Hunter]

9. At least half of opposition to Obama on DU...

At least half of opposition to Obama on DU is actually opposition to the tactics and arguments of Obama's most vociferous supporters on DU more than opposition to Obama. IMO.

Folks can be their own worst enemy.

The backlash against the most hostile loyalty police is overt and will probably continue to grow.

In time DU will probably ease into its natural role of gadfly... the loyal internal opposition. Every administration needs push-back from the base to counter the incredible pressure from the other side.

It's not disloyalty. It's politics operating as it should.

[freddie mertz]

11. So, far, the Admin. seems to understand that there is division within the ranks

And both sides get to express themselves, not always effectively.

I have noticed some of the "peppers" (yesterday) complaining about people not being banned or silenced however.

Is that their game behind the scenes?

[Cha]

10. The only one saying "Obama can do no wrong" is you.

[freddie mertz]

12. I never say that, except as an adjective.

[Cha]

13. It's obvious.

[freddie mertz]

14. Well, if the adjective fits....

[Cha]

17. Or if the adjective doesn't fit..it doesn't make a difference.

[freddie mertz]

19. Thankfully, it does.

[Cha]

21. Not to you, obviously, because Pres Obama supporters

know he's not perfect.

[freddie mertz]

22. They may "know" that... but it doesn't matter...

We can only know them by what they post.

[Cha]

23. Yeah, in your bullshit Orwellian world.

[freddie mertz]

24. We all live in a bullshit Orwellian world, my friend.

"War is Peace."

[Cha]

26. Yeah, in your demagogic world.

[freddie mertz]

27. You spelled that last word wrong.

And you obviously missed my point in the previous reply.

Have you even read Orwell?

[impik]

15. I see now Krugman is a prophet.

[Kurt_and_Hunter]

16. He's a columnist, and one of the better ones on our side of the fence

All columnists predict things.

All are fallible.

Krugman is a bit better than most since economics is a big part of what drives politics and culture, so it helps to have a good handle on it.

[Cha]

18. Yeah, and his propheteering

doesn't always pan out.

[freddie mertz]

25. Do you hate him too?

[Kurt_and_Hunter]

28. .

[arcadian]

20. Aftermath of a financial crisis? More like the prelude to one.