Paul Krugman uses the D word today, arguing that we're now in the early stages of a third depression. It may turn out to be more like the Long Depression of the 19th century than the dreaded Great Depression, but that's not going to offer much succor to the legions of unemployed who are likely to stay that way for years to come. And it's a failure of policy, he adds, with world leaders scrambling to assert "fiscal responsibility" when they should be boosting spending to promoting recovery.
"Around the world—most recently at last weekend’s deeply discouraging G-20 meeting—governments are obsessing about inflation," he writes for the New York Times, "when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending." It's not Greece that's undermined the world economy, he writes. "It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times."