Paul Krugman, The New York Times, February 8, 2008
The economic news has been fairly dire this week. The credit crunch is getting worse, and a widely watched indicator of trends in the service sector — which is most of the economy — has fallen off a cliff. It’s still not a certainty that we’re headed into recession, but the odds are growing greater.
And if past experience is any guide, the troubles will persist for a long time — say, into the middle of 2010.
The problems now facing the U.S. economy look a lot like the problems that caused the last two recessions — but this time in combination.
On one side, the bursting of the housing bubble is playing the role that the bursting of the dot-com bubble played in 2001. On the other, the subprime crisis is creating a credit crunch reminiscent of the crunch after the savings-and-loan crisis of the late 1980s, which led to recession in 1990.
Now, you may have heard that those recessions were short. And it’s true that the last two recessions both officially ended after only eight months.
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Paul Krugman: A Long Story
Paul Krugman, The New York Times, February 8, 2008
The economic news has been fairly dire this week. The credit crunch is getting worse, and a widely watched indicator of trends in the service sector — which is most of the economy — has fallen off a cliff. It’s still not a certainty that we’re headed into recession, but the odds are growing greater.
And if past experience is any guide, the troubles will persist for a long time — say, into the middle of 2010.
The problems now facing the U.S. economy look a lot like the problems that caused the last two recessions — but this time in combination.
On one side, the bursting of the housing bubble is playing the role that the bursting of the dot-com bubble played in 2001. On the other, the subprime crisis is creating a credit crunch reminiscent of the crunch after the savings-and-loan crisis of the late 1980s, which led to recession in 1990.
Now, you may have heard that those recessions were short. And it’s true that the last two recessions both officially ended after only eight months.
Read More Here