Gah!

Paul Krugman singlehandedly makes everyone start buying sacks of rice and beans

And deciding where to dig the bunker....

Will Hutton: You are warning that what happened to Japan could happen to the whole world. Japan's GDP at the end of this year will be no higher than it was in 1992 - 17 lost years. You are saying that this is an ongoing risk, certainly for the North Atlantic economy - maybe the world economy.

Paul Krugman: Yes. It's not that the risk of the Japan syndrome has receded very much. The risk of a full, all-out Great Depression - utter collapse of everything - has receded a lot in the past few months. But this first year of crisis has been far worse than anything that happened in Japan during the last decade, so in some sense we already have much worse than anything the Japanese went through. The risk for long stagnation is really high.

Brother, can you spare a dime?

More graphs from Brian DeLong:

Because monetary policy is already tapped out--Treasury interest rates are at zero--and employment losses are about to be bigger than in any previous recession since the Great Depression itself.

Whatever the future will be, we're not going back to the way we were.

And then there's this video:

in response to the usual CSPAN hysterical caller, Rep Kanjorski gives his perspective on the bailout, it is especially interesting to hear how the money market drawdown threatened to collapse the entire world economy in 24 hours back in the fall of 2008, which was the motivation for the first 350 billion.

Pointing fingers:

The revolution was started by Chicago's first convert -- Richard Nixon in 1971. It was carried forward by the Reagan and Clinton administrations. Soon it became more profitable to grow money from money than to grow maize, textiles or steel.

Building up debts and deficits became acceptable. During the Bush-Cheney years the national debt doubled from $5.7 trillion to $10.7 trillion. 'Reagan proved ...deficits don't matter' said Dick Cheney in 2001.

Making money from money became the aim of economic policy. Chicago economists argued that private bankers could be trusted to create and distribute credit. That the US economy could safely be held aloft by a credit-fueled shopping spree. Shopping became the major economic activity.

Today the finance sector grabs more than 30% of domestic corporate profits -- double its share 25 years ago. And fully 75% of US GDP is down to personal consumption expenditures -- up from around 60% in the 1960s.

Today millions are jobless, homeless and hungry.

Then there's Robert Reich at TPM:



Paul Krugman:

Now, House and Senate negotiators have to reconcile their versions of the stimulus, and it’s possible that the final bill will undo the centrists’ worst. And Mr. Obama may be able to come back for a second round. But this was his best chance to get decisive action, and it fell short.

So has Mr. Obama learned from this experience? Early indications aren’t good.

For rather than acknowledge the failure of his political strategy and the damage to his economic strategy, the president tried to put a postpartisan happy face on the whole thing. “Democrats and Republicans came together in the Senate and responded appropriately to the urgency this moment demands,” he declared on Saturday, and “the scale and scope of this plan is right.”

No, they didn’t, and no, it isn’t.

I think I'm going to go bury some gold in the backyard....

You know the world economy is bad

When ICELAND riots...

Bush's legacy: Femafication

Paul Krugman: (my bold)

Meanwhile, the British government went straight to the heart of the problem — and moved to address it with stunning speed. On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement.

At a special European summit meeting on Sunday, the major economies of continental Europe in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts. And whaddya know, Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities (although he still seems to be moving with painful slowness).

As I said, we still don’t know whether these moves will work. But policy is, finally, being driven by a clear view of what needs to be done. Which raises the question, why did that clear view have to come from London rather than Washington?

It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as “private good, public bad,” which must have made it hard to face up to the need for partial government ownership of the financial sector.

I also wonder how much the Femafication of government under President Bush contributed to Mr. Paulson’s fumble. All across the executive branch, knowledgeable professionals have been driven out; there may not have been anyone left at Treasury with the stature and background to tell Mr. Paulson that he wasn’t making sense.

Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.

Don't panic! Don't panic!

When it comes to the current financial crisis, it's become pretty clear that an appearance by President Bush doesn't calm nerves. It rubs them raw.

With global markets in a state of panic, with the world talking about the end of American capitalism, with ordinary citizens watching in despair as their savings vanish, we could all use some reassurance.

Had the president this morning announced something new, specific and verifiable, it might have helped. Most economists are persuaded that the semi-nationalization of American banks through direct infusions of capital is our best bet at this point. And the administration is reportedly working on a plan to do just that.

But today all Bush gave us was limp cheerleading, vaguely assuring us he's doing everything possible.

He's vague because he no longer gives a shit. He's quit long ago doin' the preznit thing because it was just too much hard work. He's gonna hand the steaming pile of rubble over to the next guy and head off to Paraguay...