Krugman Keeps His Chin Down
Krugman is dismal:
The crisis is over! Or so some are saying.
OK, a couple of things.
One is that even in the Great Depression, things didn’t head down all the time. The chart above (not included, sorry), from Eichengreen and O’Rourke, shows world industrial production in months from the previous peak, in the Depression and in the current crisis. Notice that there were several upturns along the way; each of those could have been — and was! — heralded as the beginning of recovery.
Meanwhile, about those great numbers from Wells Fargo: remember, reported profits aren’t a hard number; they involve a lot of assumptions. And at least some analysts are saying that the Wells assumptions about loan losses look, um, odd. Maybe, maybe not; but you do have to say that it would be awfully convenient for banks to sound the all clear right now, just when the question of how tough the Obama administration will really get is hanging in the balance.
All that said, I would not be surprised if GDP growth is positive in the second half of this year, if only because of the inventory bounce. But I will be surprised if the unemployment rate actually turns down.
