World economy stabilizing: Krugman

[Benny B]

World economy stabilizing: Krugman
Mon May 25, 2009

ABU DHABI (Reuters) - The world economy has avoided "utter catastrophe" and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.

"I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now," Krugman told a seminar.

"I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

The Princeton professor and New York Times columnist has said he fears a decade-long slump like that experienced by Japan in the 1990s.

He has criticized the U.S. administration's bailout plan to persuade investors to help rid banks of up to $1 trillion in toxic assets as amounting to subsidized purchases of bad assets.

Speaking in UAE, the world's third-largest oil exporter, Krugman said Japan's solution of export-led growth would not work because the downturn has been global.

"In some sense we may be past the worst but there is a big difference between stabilizing and actually making up the lost ground," he said.

"We have averted utter catastrophe, but how do we get real recovery?

"We can't all export our way to recovery. There's no other planet to trade with. So the road Japan took is not available to us all," Krugman said.

Global recovery could come about through more investment by major corporations, the emergence of a major technological innovation to match the IT revolution of the 1990s or government moves on climate change.

"Legislation that will establish a capping grade system for greenhouse gases' emissions is moving forward," he said, referring to the U.S. Congress.

"When the Europeans probably follow suit, and the Japanese, and negotiations begin with developing countries to work them into the system, that will provide enormous incentive for businesses to start investing and prepare for the new regime on emissions... But that's a hope, that's not a certainty."

[Bindare_Dundat]

"We have averted utter catastrophe, but how do we get real recovery? "I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

Translation: "We have used the power of positive suggestion and pumped trillions of dollars into a doomed system and so far the lemmings have bought into it but how long untill reality casts a light onto how fucked we really are? I'm not too sure... maybe 5 months."

[Benny B]

"We have averted utter catastrophe, but how do we get real recovery? "I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

Translation: "We have used the power of positive suggestion and pumped trillions of dollars into a doomed system and so far the lemmings have bought into it but how long untill reality casts a light onto how fucked we really are? I'm not too sure... maybe 5 months."

Run on sentence. 

You are not worthy of "translating" Paul Krugman. 

[SAMSON123]

World economy stabilizing: Krugman
Mon May 25, 2009

ABU DHABI (Reuters) - The world economy has avoided "utter catastrophe" and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.

"I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now," Krugman told a seminar.

"I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."

The Princeton professor and New York Times columnist has said he fears a decade-long slump like that experienced by Japan in the 1990s.

He has criticized the U.S. administration's bailout plan to persuade investors to help rid banks of up to $1 trillion in toxic assets as amounting to subsidized purchases of bad assets.

Speaking in UAE, the world's third-largest oil exporter, Krugman said Japan's solution of export-led growth would not work because the downturn has been global.

"In some sense we may be past the worst but there is a big difference between stabilizing and actually making up the lost ground," he said.

"We have averted utter catastrophe, but how do we get real recovery?

"We can't all export our way to recovery. There's no other planet to trade with. So the road Japan took is not available to us all," Krugman said.

Global recovery could come about through more investment by major corporations, the emergence of a major technological innovation to match the IT revolution of the 1990s or government moves on climate change.

"Legislation that will establish a capping grade system for greenhouse gases' emissions is moving forward," he said, referring to the U.S. Congress.

"When the Europeans probably follow suit, and the Japanese, and negotiations begin with developing countries to work them into the system, that will provide enormous incentive for businesses to start investing and prepare for the new regime on emissions... But that's a hope, that's not a certainty."

DREAM ON KRUGMAN...The SHIT has not even hit the fan yet. Americas dollar is being dropped everywhere, america manufactures NOTHING, america has no industry anymore, MILLIONS OF AMERICAN ARE UNEMPLOYED NOW, the fallout from the wall street/financial scams has not even fully come to light yet, the BAILOUT and recent announcement by Obama that "america has run out of money" hasn't shown its effects yet...and this CLOWN is talking about a turn around happening soon???...Like I said DREAM ON ....

[Fury]

Run on sentence. 

You are not worthy of "translating" Paul Krugman. 

It's Getbig, where everyone is smarter than a MIT educated, Nobel Prize winning economist!!!! 

Our two resident google-wizards Bindare and Samson are proof positive of that.

[Benny B]

It's Getbig, where everyone is smarter than a MIT educated, Nobel Prize winning economist!!!! 

Our two resident google-wizards Bindare and Samson are proof positive of that.

LOL

[Deicide]

So I am not attacked as usual, here is a very well known and conservative economist who holds the opposite view:

May 14, 2009
Op-Ed Contributor
The Almighty Renminbi?
By NOURIEL ROUBINI
THE 19th century was dominated by the British Empire, the 20th century by the United States. We may now be entering the Asian century, dominated by a rising China and its currency. While the dollar’s status as the major reserve currency will not vanish overnight, we can no longer take it for granted. Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese renminbi. This would have serious costs for America, as our ability to finance our budget and trade deficits cheaply would disappear.

Traditionally, empires that hold the global reserve currency are also net foreign creditors and net lenders. The British Empire declined — and the pound lost its status as the main global reserve currency — when Britain became a net debtor and a net borrower in World War II. Today, the United States is in a similar position. It is running huge budget and trade deficits, and is relying on the kindness of restless foreign creditors who are starting to feel uneasy about accumulating even more dollar assets. The resulting downfall of the dollar may be only a matter of time.

But what could replace it? The British pound, the Japanese yen and the Swiss franc remain minor reserve currencies, as those countries are not major powers. Gold is still a barbaric relic whose value rises only when inflation is high. The euro is hobbled by concerns about the long-term viability of the European Monetary Union. That leaves the renminbi.

China is a creditor country with large current account surpluses, a small budget deficit, much lower public debt as a share of G.D.P. than the United States, and solid growth. And it is already taking steps toward challenging the supremacy of the dollar. Beijing has called for a new international reserve currency in the form of the International Monetary Fund’s special drawing rights (a basket of dollars, euros, pounds and yen). China will soon want to see its own currency included in the basket, as well as the renminbi used as a means of payment in bilateral trade.

At the moment, though, the renminbi is far from ready to achieve reserve currency status. China would first have to ease restrictions on money entering and leaving the country, make its currency fully convertible for such transactions, continue its domestic financial reforms and make its bond markets more liquid. It would take a long time for the renminbi to become a reserve currency, but it could happen. China has already flexed its muscle by setting up currency swaps with several countries (including Argentina, Belarus and Indonesia) and by letting institutions in Hong Kong issue bonds denominated in renminbi, a first step toward creating a deep domestic and international market for its currency.

If China and other countries were to diversify their reserve holdings away from the dollar — and they eventually will — the United States would suffer. We have reaped significant financial benefits from having the dollar as the reserve currency. In particular, the strong market for the dollar allows Americans to borrow at better rates. We have thus been able to finance larger deficits for longer and at lower interest rates, as foreign demand has kept Treasury yields low. We have been able to issue debt in our own currency rather than a foreign one, thus shifting the losses of a fall in the value of the dollar to our creditors. Having commodities priced in dollars has also meant that a fall in the dollar’s value doesn’t lead to a rise in the price of imports.

Now, imagine a world in which China could borrow and lend internationally in its own currency. The renminbi, rather than the dollar, could eventually become a means of payment in trade and a unit of account in pricing imports and exports, as well as a store of value for wealth by international investors. Americans would pay the price. We would have to shell out more for imported goods, and interest rates on both private and public debt would rise. The higher private cost of borrowing could lead to weaker consumption and investment, and slower growth.

This decline of the dollar might take more than a decade, but it could happen even sooner if we do not get our financial house in order. The United States must rein in spending and borrowing, and pursue growth that is not based on asset and credit bubbles. For the last two decades America has been spending more than its income, increasing its foreign liabilities and amassing debts that have become unsustainable. A system where the dollar was the major global currency allowed us to prolong reckless borrowing.

Now that the dollar’s position is no longer so secure, we need to shift our priorities. This will entail investing in our crumbling infrastructure, alternative and renewable resources and productive human capital — rather than in unnecessary housing and toxic financial innovation. This will be the only way to slow down the decline of the dollar, and sustain our influence in global affairs.

Nouriel Roubini is a professor of economics at the New York University Stern School of Business and the chairman of an economic consulting firm.

http://www.nytimes.com/2009/05/14/opinion/14Roubini.html?_r=1&pagewanted=print

[SAMSON123]

It's Getbig, where everyone is smarter than a MIT educated, Nobel Prize winning economist!!!! 

Our two resident google-wizards Bindare and Samson are proof positive of that.

Thanks for the compliment...I have never been called a WIZARD before. Does that title come with a magic wand, invisible cloak and or the city of OZ?

I love these so called financiall experts who always show up AFTER calamity has struck...you know kinda like the weather man telling you the weather AFTER it has happened. Sort of don't need that information by then huh?

Where was this MIT genius BEFORE all of this happened? It is not like he was that Reinhardt guy who gave those prophetic (though cryptic) announcements of the coming financial calamity, now striking the world, in early 2008. Had I know of his accuracy in his information I certainly would have pulled out investments and invested in other things. Sadly though at the time I had no idea who he was or whether what he was saying was true...I know now. As for this guy Krugman..Uh..where was/are his predictions? Does MIT not know how to forsee trouble based upon current trends? Do they not have "INSIDERS" telling all on what is going to come about? Hmmmm..what school did Reinhardt go to? Now that is the university a person should attend if they wish to really help keep honesty in the finanacial markets...

So much for MIT and its fame...
 

[Rami]

He is saying that because he thinks he as some influence on wall street and can't stand watching his stock portfolio falling any longer.

Everything said is for his own game alone.

[Bindare_Dundat]

It's Getbig, where everyone is smarter than a MIT educated, Nobel Prize winning economist!!!! 

Our two resident google-wizards Bindare and Samson are proof positive of that.

You actually typed something that didn't have the word Muslim in it. Congratulations, there is hope for you yet.

[Soul Crusher]

You actually typed something that didn't have the word Muslim in it. Congratulations, there is hope for you yet.

Until Krugman has a video time stamped like this, he has no basis to make any claims whatsoever:

[Deicide]

You actually typed something that didn't have the word Muslim in it. Congratulations, there is hope for you yet.

Mexicans.

[Benny B]

Survey: Most economists see recession end in '09
By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa

WASHINGTON – More than 90 percent of economists predict the recession will end this year, although the recovery is likely to be bumpy.

That assessment came from leading forecasters in a survey by the National Association for Business Economics released Wednesday. It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues.

About 74 percent of the forecasters expect the recession — which started in December 2007 and is the longest since World War II — to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year, and the remaining 7 percent believe the recession will end in the first quarter of 2010.

"While the overall tone remains soft, there are emerging signs that the economy is stabilizing," said NABE president Chris Varvares, head of Macroeconomic Advisers. "The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines."

One of the major forces that plunged the economy into a recession was the financial crisis that struck with force last fall and was the worst since the 1930s. Economists say recoveries after financial crises tend to be slower.

Against that backdrop, unemployment will climb this year even if the economy is rebounding, the NABE forecasters predict. Companies won't be in a rush to hire until they feel certain any recovery is firmly rooted.

For all of this year, the forecasters said the unemployment rate should average 9.1 percent, a big jump from 5.8 percent last year and up from its current quarter-century peak of 8.9 percent. If NABE forecasters are right, it would be the highest since a 9.6 percent rate in 1983, when the country was struggling to recover from a severe recession.

Some forecasters thought the unemployment rate could rise as high as 10.7 percent in the second quarter of next year. The NABE outlook from 45 economists was conducted April 27 through May 11.

General Motors Corp., chemical company DuPont and Clear Channel Communications Inc. were among the companies announcing mass layoffs during the survey period.

With joblessness rising, consumers — major shapers of overall economic activity — likely will stay cautious, making for a tepid turnaround. And given the big bite the recession has taken out of household wealth, notably the values of homes and investment portfolios, consumers probably will stay subdued for some time.

Seventy-one percent of the forecasters believe a more-thrifty consumer will be around for at least the next five years. Americans' personal savings rate edged up to 4.2 percent in March, marking the first time in a decade that the savings rate has been above 4 percent for three straight months.

Even as the NABE forecasters believe the country will emerge from recession later this year, they also predict the economy's overall performance in 2009 will be rotten.

The economy should contract by 2.8 percent this year, the forecasters said in updated projections. That's worse than the 1.9 percent drop they forecast in late February. If they are right, it would mark the worst annual contraction since 1946, when economic activity fell by 11 percent.

Still, the forecasters believe the worst is already behind the country in terms of lost economic activity.

The economy shrank at a 6.1 percent annualized pace in the first three months of this year, on top of a 6.3 percent decline in the final three months of last year, the worst six-month performance in 50 years.

For the current April-June quarter, the NABE forecasters believe the economy will shrink at a pace of 1.8 percent. After that, the economy should start growing again — at a 0.7 percent pace in the third quarter and a 1.8 percent pace in the fourth quarter.

NABE's growth projections for the third and fourth quarters are lower than those made in late February. The downgrade was based on the expectation that businesses, whose profits and sales were hit hard by the recession, will remain wary of ramping up investment.

President Barack Obama's $787 billion stimulus package of increased government spending and tax cuts, near-zero interest rates ordered by the Fed and government programs to get banks to lend more freely again all factor into the expected economic revival.

Many forecasters also predict that home sales will hit bottom by the middle of this year, another stabilizing factor for the economy.

In an encouraging sign, sales of previously owned home rose 2.9 percent in April as buyers snapped up bargains, the National Association of Realtors reported Wednesday. The median sales price sank to $170,200, a 15.4 percent drop from a year ago. Data on new-home sales is due Thursday.

Next year, the economy should grow by 2 percent, the forecasters said. That was lower than the 2.4 percent growth projected in February.

With a lethargic recovery expected, forecasters predict the Fed won't start boosting interest rates until the second quarter of next year.

Because Fed policymakers expect credit and financial problems to ebb slowly, "the pace of the recovery would continue to be damped in 2010," they said last week.

[Soul Crusher]

It wont matter, you will still be unemployed. 

Additionally, most "economists" did not see the current recession coming and laughed at people like Schiff & Roubini who called this dead on. 

[Benny B]

It wont matter, you will still be unemployed. 

Speak for yourself, fat man.

Additionally, most "economists" did not see the current recession coming and laughed at people like Schiff & Roubini who called this dead on. 

Incorrect, as usual. 

[Soul Crusher]

Speak for yourself, fat man.
Incorrect, as usual. 

I am self employed.

Show me your genius left wing economists who were as accurate as Schiff and Roubini and maybe we can have a decent discussion.  Until then, go back to your Obama blow up doll.   

[Fury]

You actually typed something that didn't have the word Muslim in it. Congratulations, there is hope for you yet.

You seem butt hurt that no one pays attention to the 12 doom and gloom economics articles you have copy/pasted every day for the last 8 months, none of which have come true. Sorry but your credibility was annihilated when Benny exposed you for a keyboard jockey economist with no grasp of finance.

But feel free to keep insinuating that you're more intelligent than Krugman.

[Benny B]

I am self employed.

Sure you are.  Having an eBay account doesn't count.

Show me your genius left wing economists who were as accurate as Schiff and Roubini and maybe we can have a decent discussion.  Until then, go back to your Obama blow up doll.   

I am not aware of an Obama "blow up doll," but no doubt your Limbaugh Butt Plug up gets plenty of use.

[Soul Crusher]

Sure you are.  Having an eBay account doesn't count.
I am not aware of an Obama "blow up doll," but no doubt your Limbaugh Butt Plug up gets plenty of use.

I have fully disclosed to others my company and employment.  Its all verifiable. 

[Fury]

Funny, Roubini is a great economist but he has been wrong on many other predictions before. Even a broken clock is right twice a day.

[Soul Crusher]

Funny, Roubini is a great economist but he has been wrong on many other predictions before. Even a broken clock is right twice a day.

He may be, but I am more willing to believe those who were accurate before this receission and its cause than those who are late to the game. 

[Fury]

He may be, but I am more willing to believe those who were accurate before this receission and its cause than those who are late to the game. 

I personally think he's too over the top. He's carved his own little niche in the economic world by being Mr. Doom and Gloom about everything.

[Soul Crusher]

I personally think he's too over the top. He's carved his own little niche in the economic world by being Mr. Doom and Gloom about everything.

What about Schiff? 

You have seen his video compilation correct?

[Deicide]

You seem butt hurt that no one pays attention to the 12 doom and gloom economics articles you have copy/pasted every day for the last 8 months, none of which have come true. Sorry but your credibility was annihilated when Benny exposed you for a keyboard jockey economist with no grasp of finance.

But feel free to keep insinuating that you're more intelligent than Krugman.

You are a god.

[Fury]

You are a god.

Why is it that you feel the need to go into my profile and respond to every post I've made in the last 12 hours every time I insult you? Move on with your life, you lying shill.