Is th US looking at it's own "Lost Decade?" [View All]

Watching the economy over the past few months, this was question that I had posed myself. Paul Krugman was apparently doing the same and came to the same conclusion that I did: Yes, we're heading towards a lost decade unless strong, decisive action is taken now to further stimulate the economy and reduce unemployment.

"Despite a chorus of voices claiming otherwise, we aren’t Greece. We are, however, looking more and more like Japan.

For the past few months, much commentary on the economy — some of it posing as reporting — has had one central theme: policy makers are doing too much. Governments need to stop spending, we’re told. Greece is held up as a cautionary tale, and every uptick in the interest rate on U.S. government bonds is treated as an indication that markets are turning on America over its deficits. Meanwhile, there are continual warnings that inflation is just around the corner, and that the Fed needs to pull back from its efforts to support the economy and get started on its “exit strategy,” tightening credit by selling off assets and raising interest rates.

And what about near-record unemployment, with long-term unemployment worse than at any time since the 1930s? What about the fact that the employment gains of the past few months, although welcome, have, so far, brought back fewer than 500,000 of the more than 8 million jobs lost in the wake of the financial crisis? Hey, worrying about the unemployed is just so 2009.

But the truth is that policy makers aren’t doing too much; they’re doing too little. Recent data don’t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth. "

<http://www.nytimes.com/2010/05/21/opinion/21krugman.html>

Worse yet, the boom-bust cycle that our country goes through is contracting, one down cycle coming so close on the heels of the last that we simply don't have time to recover, time to fully re-employ those who are long term unemployed. If you track the history of these cycles, you will notice that they have gone from a once in a generation phenomenon, to once a decade, and now the last one, which started seven years after the tech bubble burst.

More bad news, our recoveries are getting weaker

"The real struggle that we have is not with the next year, it's with the next decade, as Paul suggests, because our trend growth and expansions is getting softer and softer. The last expansion was the weakest expansion in the post-World War II period."

<http://www.npr.org/templates/story/story.php?storyId=127059439>

We need to stop engaging in this short term economic thinking, bolstering the economy for long enough to get through the next election cycle. We need another stimulus in this country in order to start re-employing as many people as possible, now. We can't afford to let the market take care of unemployment, because it simply won't, and worse, in another six-seven years we'll have another bust period that will leave even more millions of long term unemployed on top of what we already have.

Obama and the Congressional Dems need to take charge on this one, they need to introduce another stimulus bill, one devoted to creating more jobs, not more tax cuts. Obama needs to fulfill his promise of creating a green energy industry in order to help with both our energy needs and environment, along with helping our unemployed.

Otherwise, this country will collapse in relatively short order. If people are worried about racking up our debt for these programs, well then end the wars, cut the defense budget and start taking care of our own people. We are headed for major problems, let's solve them now, while we can, rather than simply going off the cliff.