Krugman: 'Reasonably High Chance' Economy Will Contract Next Year (VIDEO)

Economist Paul Krugman said on Sunday that there's a "reasonably high chance" the economy will contract in the second half of next year.

Appearing on ABC's "This Week," Krugman said he agreed with fellow economist (and Nobel prize winner) Joseph Stiglitz. "The things we know about are all gonna be negative in the second half of next year," he said. But he said the chance, while significant, was "less than fifty-fifty odds."

"I would basically go with Joe Stiglitz," Krugman added, "I'm really worried about the second half."

Stiglitz has been calling for a second stimulus.

Comments

[Angie Cordeiro]

02:42 PM on 12/29/2009

http://www.dailykos.com/story/2009/12/28/819863/-We-have-been-warned

[my p0litikal kos]

12:25 PM on 12/29/2009

Lets throw the bums out. We'll start with 1/2 the Obammi cabinet & the fed.
Obama = Obammi until he gets his act together. I'm regretting voting 4 him.

hat tip to: http://iamned111.blogspot.com

[Carolab]

10:49 PM on 12/28/2009

What does he mean, "the things we know about"?

[Rayme]

10:42 PM on 12/28/2009

Great job Krugman, stating what every average American knows.

[my p0litikal kos]

09:14 PM on 12/28/2009

Good articles 4 slow news day: http://iamned111.blogspot.com

[duxguts]

08:50 PM on 12/28/2009

Mr. Krugman has never met a microphone he didn't like.

[inthedesert]

08:33 PM on 12/28/2009

Oh I think America is in for an extended period of profoundly bad times. The continued decline and decimation of the middle class will be felt for decades. There is nothing ahead for this once-great nation but more job losses, more foreclosures, more middle class folks suddenly finding themselves among the newly poor and homeless. The banking industry is in FULL control of America now and they are simply NOT going to do anything to help the average American who is struggling to maintain their way of life. I am preparing to do a Chapter 7. If the banks can walk away from their debts and then BE REWARDED for that, so can I....screw em.

[markinaz]

10:08 PM on 12/28/2009

Did a Chapter 11 4 years ago. Literally a month before Shrub signed the reform act. Best decision I ever made. The banks and the Credit Card cos. have abandoned all pretense that they exist for some societal benefit. Ruinous usury and Byzantine rules and regulations have made credit the 21st century equivalent of "fools gold".

[batmancw]

08:11 PM on 12/28/2009

For what it's worth, Peter Schiff (the president of Euro Pacific Capital),is forecasting a very bleak 2010 and beyond due to the continued Government spending and risky trading practices (Banks & WS still being allowed)

Yes, i know he's a Republican, yet he's been pretty "right on" in the run up to the current crisis which he & others warned of well in advance. Here's some examples:

In an August 2006 interview Schiff said: "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States." On Dec 31, 2006 in debate on Fox News, Schiff forecast that "what's going to happen in 2007" is that "real estate prices are going to come crashing back down to Earth". In fact, the median price of an American single-family home did fall in 2007, for the first time in decades. As part of these exchanges on Fox News and his repeated appearances on financial news network CNBC, Schiff had mentioned factors such as speculators and "the absence of lending standards" which are now seen by many to indeed be contributing factors to the "housing crisis" of 2007-2009.

[batmancw]

08:12 PM on 12/28/2009

On December 13, 2007 in a Bloomberg interview on the show Open Exchange, Schiff further added that he felt that the crisis would extend to the credit card lending industry. Following this observation, it was soon reported on December 23, 2007 by the Associated Press that "The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP... At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission."

Schiff says that the current economic crisis is not the problem; it is the solution. He claims the transition from borrowing and spending to saving and producing cannot be accomplished without a severe recession, given the current imbalances of the U.S. economy. But according to him, that transition needs to happen. He also thinks the government is doing no one a favor by trying to "ease the pain" with stimulus packages, bailouts and such. Schiff believes these actions will only make the situation worse and possibly result in hyperinflation if the government continues to "replace legitimate savings with a printing press."[25]

Schiff is a firm believer in reducing government regulation of the economy. Schiff worries that Barack Obama will increase such regulation.

[batmancw]

08:13 PM on 12/28/2009

Granted, "projections" are often wrong, yet I prefer to give a bit more credence to those who've had a track record of being correct.

[batmancw]

08:16 PM on 12/28/2009

By government regulation of the economy, he's not talking about the Banking and WS laws that are needed. He's talking more about the bailing out of businesses deemed "too big to fail", and suggests that they should have been allowed to do just that.

[LeifEiriksson]

09:45 PM on 12/28/2009

Don't sound like you have to apologize to Schiff. He's been dead on for the past ten years and anyone who can't recognize that doesn't have half a damn brain. The Austrian economists called the Great Depression, dotcom bubble, and housing bubble.

[HMDMSR]

10:25 PM on 12/28/2009

Marxists called the whole thing in the 19th century.

[markm8128]

10:33 PM on 12/28/2009

I've been investing according to Schiff, and I've only lost money. I hope some of his investment predictions eventually come true.

[ezeflyer]

07:27 PM on 12/28/2009

"Economists have a worse record of correct predictions than bookies do".
Science News study

[ScapeGoat]

07:13 PM on 12/28/2009

Just remember what Saint Ray-gun taught us. There is nothing wrong with debt.

[cberkland]

05:59 PM on 12/28/2009

He's wrong. It was a great decade. The top 1% got richer and the bottom 99% got poorer. That was the corporate elite's goal all along. Success!

[infodoc1]

04:56 PM on 12/28/2009

Hey Washington, the wealth isn't trickling down for some reason, we need another handful of crumbs.

[ScapeGoat]

07:11 PM on 12/28/2009

That is why trickle down is also call piss down economic. The poor and middle class get pissed on.

[GoldsteinD]

04:42 PM on 12/28/2009

and when does the first stimulus kick in?

[platanoman]

05:22 PM on 12/28/2009

It is kicking in. But, a big portion of the stimulus will kick in 2010

[batmancw]

08:20 PM on 12/28/2009

Right. It was held back to use as a "slush-fund" to spend in states where Dems may be in trouble during the 2010 elections. Politics as usual.

[johnqsittinzen]

04:42 PM on 12/28/2009

There's a reasonably high chance my sphincter will contract every time Paul Krugman opens his mouth.

[markinaz]

05:02 PM on 12/28/2009

Gets you all hot and bothered...eh?

[johnqsittinzen]

06:07 PM on 12/28/2009

I said contract, not lubricate and dilate. Sometimes we see what we want to see.

[novoorganum]

04:07 PM on 12/28/2009

“"Interest arises naturally in any community in which private property is unrestricted and theft is punished, because some of the most economical processes of production are slow, and those who have the skill to perform them may not have the means of living while they are being completed. But the power of lending money gives such great wealth and influence to private capitalists that unless strictly controlled it is not compatible with any real freedom for the rest of the population. Its effects at present, both in the industrial world and in international politics, are so bad that its seems imperatively necessary to devise some means of curbing its power."

Bertarand Russell”