Tags: europe | us | financial | crisis

Krugman Says US, Europe Are ‘Nowhere Close to Ending Crisis’

Wednesday, 03 Oct 2012 10:50 AM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The United States and the European Union are “nowhere close to ending” the financial crisis and German-led austerity efforts may lead to a 1930s-style economic depression, Nobel laureate Paul Krugman said.

Five years into the crisis, the United States needs “another round of stimulus” and Federal Reserve officials “should be doing whatever they can” to aid the recovery, while Europe needs a fiscal union to save its single currency, Krugman said in a speech in Belgrade today.

“Europe must accept there are limits to austerity and that additional austerity won’t do anything but bring societies on the verge of collapse,” said Krugman, an economics professor at Princeton University. “No country will have prosperity until Germany and the ECB have decided that too much pain has been inflicted.”

The European Central Bank and the Fed have unveiled plans to fight the crisis and reduce borrowing costs. ECB President Mario Draghi last month announced an unlimited bond-buying program for distressed euro-area nations, while Fed Chairman Ben S. Bernanke has committed to another round of so-called quantitative easing.

Stabilizing Yields

Europe needs to “contain immediately the financial threat to troubled countries and stabilize yields on their borrowing, which in the end requires the ECB to be ready to be the lender of last resort and buy sovereign bonds,” Krugman said. “And that is now sort of happening,” he said, adding “there are 60 percent odds that they’ll save the euro.”

In the United States, where the recovery is struggling to gain traction, new fiscal stimulus should be “directed to distressed individuals” rather than companies, Krugman said.

In Europe, the risk of protracted and extreme austerity measures may lead to “political upheavals, radicalization” and “terrible things happening,” he said. “It’s not difficult to see the decades ahead looking like the 1930s.”


© Copyright 2014 Bloomberg News. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Democrats Love Seeing Minimum Wage on the Ballot

Tuesday, 21 Oct 2014 06:37 AM

As Democrats across the country make an election-year push to raise the minimum wage, they often point to fast food work . . .

Michelle Nunn Uses Bush Photo in Ga. Senate Campaign Ad

Tuesday, 21 Oct 2014 06:37 AM

Michelle Nunn, the Democrat running for a Senate seat in Georgia, is using a photo of former President George H.W. Bush  . . .

Evangelicals Using Obama Playbook in Hopes of Political Revival

Monday, 20 Oct 2014 21:56 PM

The religious right is looking for a political revival by singing from a familiar hymn book: Barack Obama's. . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved