Wednesday, October 07, 2009

Paul Krugman - The Return of Depression Economics

Paul Krugman spoke at WBF on The Future of the Global Economy.

Krugman is highly accomplished (Nobel prize, author, professor) and author of "The Return of Depression Economics in 2008" and other books. I have always been interested in history compared to current times. I am hoping to "see the future by looking at the past".

Krugman is an economist and like the previous economists, many of the stats are scary (although his lead in comment was positive)

Gems

"the risk of depression has passed - all indicators are showing some recovery"

Trade has dropped dramatically "pretty much unprecedented - even more than in the great depression"

Unemployment stats still are bad.

Worst hit by this down turn is not the US but the exporters.

"We are one world in a way that has never been true before." Trade is massive. It is no longer about "very different" exporting in their strengths to technology leveling the world. This is not really the internet etc. - a lot of it is containerization (container shipping). There is now vertical fragmentation of manufacturing. Manufactured goods are often shipped from place to place for different processing steps. So oil price could change the way trade happens.

Specific processing tends to be concentrated in small geographies. Even within China, certain things "cluster". I have seen that in my travels in the computer business.

"Importing labor-intensive products is a form of indirect immigration of unskilled workers into a workforce."

"When countries suffer an economic setback, recover almost always relies on creating a trade surplus. Problem is, this is global so unless we find another planet to export to..."

Oil prices and climate change is likely to crimp trade going forward.

"We need to figure out how to live with a different world"




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