How to Kill a Recovery

[dtotire]

How to Kill a Recovery
By PAUL KRUGMAN
Published: March 3, 2011



The economic news has been better lately. New claims for unemployment insurance are down; business and consumer surveys suggest solid growth. We’re still near the bottom of a very deep hole, but at least we’re climbing.

It’s too bad that so many people, mainly on the political right, want to send us sliding right back down again.

Before we get to that, let’s talk about why economic recovery has been so long in coming.

Some economists expected a rapid bounce-back once we were past the acute phase of the financial crisis — what I think of as the oh-God-we’re-all-gonna-die period — which lasted roughly from September 2008 to March 2009. But that was never in the cards. The bubble economy of the Bush years left many Americans with too much debt; once the bubble burst, consumers were forced to cut back, and it was inevitably going to take them time to repair their finances. And business investment was bound to be depressed, too. Why add to capacity when consumer demand is weak and you aren’t using the factories and office buildings you have?



read more:
http://www.nytimes.com/2011/03/04/opinion/04krugman.html?_r=1&ref=opinion