A mere month ago, in a New York Times op-ed entitled "The Diabetic Economy," Paul Krugman wrote from Lisbon:
"Things are terrible here in Portugal, but not quite as terrible as they were a couple of years ago. The same thing can be said about the European economy as a whole. That is, I guess, the good news.
The bad news is that eight years after what was supposed to be a temporary financial crisis, economic weakness just goes on and on, with no end in sight. And that’s something that should worry everyone, in Europe and beyond."
However, according to Paul, everything was hunky-dory in the US:
"Meanwhile, the overall economic and political situation in America gives ample grounds for hope, which is in very short supply over here."
Well, today, in a Times op-ed entitled "A Pause That Distresses," Krugman seems to have changed his tune. Labelling Friday’s employment report "a major disappointment," Krugman tells us:
"Should this pause worry you? Yes. Because if it does turn into a recession, or even if it goes on for a long time, it’s very hard to envision an effective policy response."
Krugman nevertheless proposes:
"For the simplest, most effective answer to a downturn would be fiscal stimulus — preferably government spending on much-needed infrastructure, but maybe also temporary tax cuts for lower- and middle-income households, who would spend the money. Infrastructure spending makes especially good sense given the federal government’s incredibly low borrowing costs: The interest rate on inflation-protected bonds is barely above zero."
Ah yes, infrastructure spending and tax cuts, which would all be well and fine if Obama had not taken American's national debt to an unsustainable $19.3 trillion, amounting to some $60,000 of debt per citizen or more than $161,000 per taxpayer.
Did you happen to see the movie "The Big Short," which tells the stories of those who foresaw the collapse of collateralized debt obligations, which in turn brought the American economy to its knees in 2008? In fact, the American economy is also teetering, but no one wants to acknowledge it.