Monday, January 23, 2012

More Good News

Paul Krugman just wrote in the New York Times that we may be in a "virtuous cycle" instead of a vicious cycle.  That is, he sees the economy improving, leading housing statistics to improve, leading to a further improvement in the economy.  It's about time, but it's very welcome.

We've always know that FDR was right:  The biggest thing we have to fear is fear itself.  Once people are afraid that they may lose their jobs, their benefits, or their overtime, they cut back on their expenditures, giving their employers less income and leading to cutbacks.  That's where we've been for a few years now.

Krugman makes the point that the Europeans have neglected to deal with the basic problems in their economies, whereas here we did let interest rates go down and we did let our housing bubble deflate.  That leaves the US in a position to improve now, and all the signs are there.  So that's something to cheer about, and hope that the virtuous cycle continues.
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