Monday, December 21, 2009

Stiglitz Sees Negative GDP Next Year

A respectable economists view of where GDP is headed next year:

http://www.cnbc.com/id/34507080
Posted by at

7 comments:

Anonymous said...

Why is there such disparity among economists? I just listned to the Fed. Res. Pres. in Chicago who says GDP will be at 3.5% next year!!! Is there a place to check out a consensus?

Econdad

December 21, 2009 at 10:19 AM
Econmom said...

Economics is not an exact science. There is wide disageement among smart people in virtually every scientific field. For example, some climatologists believe in global warming and othres don't. Everyboby has a different view of which facts are relevent. Others, especially FRB memebers are politically motivated to be overly optimistic. I don't think one FRB employee publicly voiced serios concern about the credit crisis before it began.

December 21, 2009 at 12:04 PM
Anonymous said...

This is very depressing.

December 21, 2009 at 10:07 PM
Econmom said...

It is what it is. Didn't mean to depress you, just give you a chance to prepare. Cash and very high quality corporate bonds!

December 22, 2009 at 8:04 AM
Matt said...

In that piece Stiglitz argues for a second stimulus that would be all about jobs. Is a program that resembles those of the Roosevelt administration a good idea in your opinion?

December 22, 2009 at 3:45 PM
Econmom said...

We cannot afford a second stimulus. He may be right that we need one, but we simply cannot afford it. As unemployment rises, wages will have to fall. I believe the ciming depression is an unavoidable, natural correction. We have had years of overproduction and overconsumption based not entirely, but hugely on leverage. Hence, the credit bubble. We are now feeling the consequences of the bursting of that bubble, and we need to herald in the end of bubble economics. Don't be depressed about it, be prepared. There is little government can do at this point, as interest rates are already near zero.

December 22, 2009 at 4:04 PM
Econmom said...

Also, don't be fooled into believing the new deal turned aroung the American economy. It may have eased the pain of the Great Depression, but end of WWII and the Baby boom were the real cures.

December 22, 2009 at 4:06 PM

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