Chris Matthews had Paul Krugman on yesterday's Hardball, and asked straight up "Are we going into a new Great Depression?"
While Professor Krugman said it was probably not a Great Depression, the rest of his answer was not very reassuring.
Basically Professor Krugman said the only actor who can inject money into the economy is the government.
Watch it here:
Two points that Paul Krugman had in his blog Conscience of a Liberal that worry me:
1. The economy is falling fast. We’ll see what tomorrow’s employment report says, but we could well be losing jobs at a rate of 450,000 or 500,000 a month.
2. Infrastructure spending will take time to get going — a new Goldman Sachs report suggests that projects that are “shovel-ready” are probably only a few tens of billions worth, and that a larger effort would take much of a year to get going. Meanwhile, it’s very questionable how much effect tax rebates will have on consumer demand. So it may be hard for stimulus to get much traction until late 2009 — and that’s even if Congress goes along, which may be a problem given all the bad analysis and disinformation out there.
So here’s what I’m wondering: will it, in fact, even be possible to pull the economy out of its nosedive before unemployment goes into double digits? I’m starting to wonder.