Sunday, November 16, 2008

Great Depression II

Roubini argues that the U.S. is facing the worst recession in decades (via Naked Capitalism). Roubini seems to be getting behind the curve, as even the normally staid Brad DeLong has proclaimed we are facing the worst recession since the second world war. And former Goldman Sachs chairman John Whitehead has been the first notable to raise the specter of a contraction worse than the Great Depression.

I'm not sure about the latter, but Americans do seem to be doing everything in their power to make the current downturn as bad as possible. They are well on their way to blowing 700 billion Usd - an enormous number, pretty much equal to two year's of the worst deficits in America's history (378 and 413 billion, in 2003 and 2004) - without getting much in return, except - maybe - some happy stockholders and traders. To repeat, every American - every man, woman, and child - has just forked over 2000 dollars. If the quasi-science of economics has any truth to it, it is surely that wasting resources has consequences. America has just wasted an unfathomable amount; the dire consequences must be waiting around the corner.

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