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November 21st, 2008
04:30 PM ET

The Lame-Duck Economy

Paul Krugman
The New York Times

Everyone’s talking about a new New Deal, for obvious reasons. In 2008, as in 1932, a long era of Republican political dominance came to an end in the face of an economic and financial crisis that, in voters’ minds, both discredited the G.O.P.’s free-market ideology and undermined its claims of competence. And for those on the progressive side of the political spectrum, these are hopeful times. There is, however, another and more disturbing parallel....

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Filed under: 360° Radar
soundoff (13 Responses)
  1. Gene Penszynski from Vermont

    Great article ! If bush and teh republicans are such great patriots myabe they should offer to resign enmasse and let those elceted in the last election take office immediately. As it stands now G W Bush and his republican 'base' are on track to go down in history as the worst most cowardly most unknowledgable and down right devastating policy makers in American History. What they have done to our nation can be the result of ignorance or putting self above the nation (a.k.a. GREED) or a combination of both., but ,whichever, the result is that They have consistantly Failed to confront problem after problem and admit mistakes until the issues become so enormous that they just can't be ignored anymore.

    If they want to save at least some face for themselves and actually demonstrate some GENUINE Patriotism instead of the mindless flag waving they continuously banter about they could admit their mistakes and declare a true national emergency and step aside so that the results of the last election and the will of the American People can take effect NOW !

    November 23, 2008 at 10:43 am |
  2. Jane Macdonald

    I know that economic problems in America are real and the situation is extremely dire, however I blame you, the media, for contributing to the problem by instilling sheer and utter terror in the population. If we weren't hearing news of doom and gloom all day long, I am convinced that the American people would not be panicking to the extent that they are, and the resultant catastrophy in the stock market would not have been so pronounced. All these sensational headlines makes for good TV, and every time I tune in and hear you speaking about the state of our economy (which is every time I tune in), it is so frustrating, I just want to tell you to stop escalating this madness. This continual reporting of negativity is driving people to make irrational choices, and as a result, the "recession" is a self perpetuating disaster.

    November 22, 2008 at 5:10 pm |
  3. PT6

    As usual Buffett is Right this Bailout is Needed:

    On December 2 the Executives need to demonstrate at minimum the following:

    1. Auto Executives must show cost cutting plan that also allows for producing New Green Cars.
    2. Executives (not just top management) making over $250,000 must take a 20+% pay reduction.
    3. Workers must be willing to take a 5% Good Faith reduction in the short term until the new contract.
    4. Show at least THREE NEW MODELS ready to be produced that exceed the MPG standard.
    5. Have a cost and revenue flow plan that shows they will be able to survive for one year.

    If they can satisfactorily provide evidence with a "dog and pony show" then Congress and Bush should pass a Bailout Plan.

    Philip From Ohio

    November 22, 2008 at 4:53 pm |
  4. PT6

    We need legislation to Bypass the Mortgage Bankers who refuse to cooperate in solving this CRISIS!

    Offer Direct Low Cost Government loans using the Internet and Automation with manual Checking!

    The best approach is to have Fannie and Freddie offer automated internet loans using FED Rate + 2% or 3% directly to refi homes and avoid many layers of refinancing fees and the mortgage bankers who are responsible for these "Trick" Loans! Offer this service in libraries for those not having access to the Internet at home!

    The automation can do 98% of the verification and loan application and the other 2% for manual final check by Fannie and Freddie!

    November 22, 2008 at 4:34 pm |
  5. Carol

    I agree, the present administration and congress still has enough time to
    "demolish the US economy, for sheer spite! ". This very disturbing. All we can hope is that the world will see what the Obama administration is up against. We must remember some don't want change.

    November 22, 2008 at 3:31 pm |
  6. Tyrone

    LAURA BUSH!

    I can't see anyone that would admire Mrs. Bush, she is a horrible first LADY. Just like her husband who I believe will go down as the worse President EVER! Laura Bush will go down as a totally worthless first lady. What women with that mother's love for children would not care about human life! The first Lady spot will soon go to a fine lady who will fill Laura’s shoes and make America proud. LAURA BUSH did nothing nor said nothing to stop her husband from starting the war in IRAQ. A war that cause the needless death of American troops. Many books have been written by President Bush former staff members. That claim the President lied about IRAQ! Laura Bush stood by and said nothing to her idiot husband while innocent American died in IRAQ!. All I have seen Mrs. Bush do is smile and do nothing. She comes off as a very weak person with little to say. That would not be Michelle Obama or Hillary Clinton. They would have spoken up for the country. LAURA BUSH knew her husband had horrible judgement and is not that smart. Yet she remains silent! Now I know why Former President Bush (1)_ broke down and cried. Had I had a son that stupid and knew he would not listen to reason. I WOULD CRY TOO!! Then I would have kicked his ass for the country!!!!!After the war in IRAQ is over President Bush and Laura Bush should be made to live in IRAQ!!!!

    November 22, 2008 at 7:42 am |
  7. Tyrone

    PRESISENT BUSH LAST DAYS IN OFFICE

    President Bush should be treated like a two year old! Watch him at all times and don't let him touch anything! He has a proven record of horrible judgement! Judgement that has cause the needless death of American military in Iraq! He is also was the president during the 9/11 attack. To this day the american people don't know if he is behind the reason for the attack. By his fail policy or just horrible lack of good judgement! We do know that Bush and McCain where wrong to attack Iraq! We know that there was not proper armor purchase for the military personel in Iraq! 750 Americans could have lived if the proper armor was purchase! That is stated in the 9/11 report. President Bush and the republican party and John McCain is behind the fail policy that cause the down fall of Wall Street! President Bush will go down as the worse president in America history. John McCain would have been worse! Both are out of touch with America and the world! All this talk from the John McCain camp about Obama inexperience! Is just talk. Both McCain and Bush have over 46 years of experience in government. As many years as Obama been alive. That didn't help them make the right judgement for the country! Bottom line both have given experience a bad name! Lame Duck is a insults to Ducks!

    November 22, 2008 at 7:40 am |
  8. rod

    One more thing that has become more obvious. The charity mailings have ramped up and my ability to give has been diminished. I wonder how many rich people will step up with major donations in this time of a middle and poor class decline? A corporate jet would fund one of my charitable causes for more than a year and the people that received the funds are in so much need they wouldn't know how to act. Of course I guess you have to be rich to receive gifts of that value. What was I thinking, compassionate rich? Maybe they think a lump of coal will suffice. I hate to generalize but it does appear that most of this country's leaders, both business and governmental, have lost their bearings, their compassion and their sense of fairness. They need to set aside the ideologies and entitlements and join the struggle to survive. Maybe their day to day decisions were more driven by a sense of personal survival, they would be able to lead through the lame season and well beyond. Oh, and I like ducks too, but these guys aren't quacking and don't come close to resembling the least noble duck.

    November 22, 2008 at 7:07 am |
  9. Linda

    Einstein said he didn't know how WW3 would be fought, but he knew that WW4 would be fought with sticks and rocks....I remember learning a quote from an economist in my econ class in HS circa 1970(wish I could remember his name) that said at the end of WW2, that the next war would not be fought with conventional warfare, it will be fought with economics....Welcome to WW3. Pirates are hijacking oil takers, I am going to assume that those tankers are not only headed for the U.S., maybe someone should consider escort navy ships, and convoy oil tankers like the Liberty Ships of WW2, or would that be considered politically incorrect?

    November 22, 2008 at 4:25 am |
  10. Shane, Montreal-Quebec

    I like ducks too ! I prefer my ducks from Sarah Palin and on to a silver platter so I can feast it ! just kiddin .... no but seriously, free market ideology was intended to make good business but also for it to fall and expose the corrupt if necessary? Tell me, ever since september have we been exposing the corrupt or rewarding them? AIG, Lehman bros, Fanny and whatever??? Nooooo , we have been bailing them out and rewarding them, that in my book is business as usual and no new ideas are coming forward especially from the recent auto makers collapse ! Let them go bankrupt and replace those CEO's with a new direction and re-hire the employees !!!!!!!!! Is anyone even considering it !!!! Jeezzze God help us all.

    November 22, 2008 at 12:24 am |
  11. Joanne, Solvay, NY

    My town is much like the small town in Alaska that launched Palin's political career. Instead of concentrating on the thousands my husband and I have lost, we are renovating our home. This takes the gloom and doom of all that is sad and negative, and brings us closer together. What is the gained value of our home? We aren't interested in speculation. We are interested in going "green", improving the beauty and sanctity of our environment behind the front door.

    November 21, 2008 at 10:54 pm |
  12. Max

    WHAT is it ... everything is a LAME DUCK something or OTHER????

    Lame DUCK congress, lame DUKE presidents ...

    Oh my GOD.

    (I like ducks.)

    November 21, 2008 at 6:43 pm |
  13. Uma in Liverpool, UK

    Thank you for an excellent article. I hope everyone reads it.

    The fear, particularly about Detroit, is international. The Big Three have plants all over the world. The rest of the world isn't doing so well, economically, either.

    'Deflation' is one of those scary words, which I don't quite understand, but it is worrying. I remember hearing it, in tenth grade, in the context of 'Depression'.

    What is stunning to me, and many people, is that during this supposedly 'smooth' transition, the Congress could literally demolish the US economy, for sheer spite! That is not only lack of leadership, though there is a vacuum at the top (and, one could argue, has been, for eight years), but also sheer pettiness and party-cronyism. They can see the precipice. They know something must be done. The Democrats cannot push this through, and the Republicans are having their one last opportunity to wield their 'power' - to the detriment of everyone.

    No doubt, they are counting on the notoriously short American political memory, to not blame them, when Barack Obama inherits a bombed-out crater, which he cannot fix.

    'Country first'. Yeah. Right.

    November 21, 2008 at 5:55 pm |