The Black Dog

Paul Krugman in the NYT yesterday thinks the non-event at Toronto has condemned us to a depression, only the third in the history of capitalism, and he blames it on wrong-headed government policies.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating...

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.