US on the path of Japan’s stagflation of 18 years ago, says Nobel Prize
Economics 2008 Nobel Prize Paul Krugman said the United States is heading along a path of stagnation and deflation similar to that of Japan 18 years ago given the critical economic situation and the uncertain political scenario following the recent mid term elections that brought to Congress diehard Republicans.
“We are in a very Japanese scenario in the United States” said Krugman during a conference at the annual convention of the Argentine Chamber of Construction in Buenos Aires.
The Nobel Prize said that monetary policy applied both in United States and in the European Union reflects its own limits and the Federal Reserve and the European Central Bank have lowered interest rates to zero but have been unable to re-launch their economies and are “with great difficulties in finding a solution”.
Krugman argued that the only possible way is through expenditure in infrastructure, with low interest rates, which can create millions of jobs for the unemployed, but admitted that Washington refuses “to confront such public expenditure”.
He mentioned as an example of this reticence the recent cancelling of a major public works infrastructure in the US, the construction of a train tunnel below the River Hudson in New York.
“This economic slowdown, this depression can continue for a long time…It’s a crisis of the North Atlantic, of United States and Western Europe”, he added.
Krugman said that to the economic crisis must be added now the “political paralysis of a US government which is divided and President Barack Obama “with no cooperation capacity” from an adverse Congress following the loss of the majority in the recent mid term elections.
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“This economic slowdown, this depression can continue for a long time…It’s a crisis of the North Atlantic, of United States and Western Europe”, he added.” Yes, and so they need to eat, that's why our country will receive instructions from the same people who have done all those wrong deeds in those countries.
The North Atlantic countries have fattened up their populations at the expense of the rest of the world for over 50 years running now. The straw they used to suck their neighbors dry is the international financial system, now teetering on the brink of collapse. As the Euro-American oligarchy begins the process of rendering their own populations to continue feeding the beast, South America and Argentina in particular should be warier than ever.
The best protection against further ravages by our northern neighbors is to stay out of their financial system as much as possible, especially in the realm of debt. The Kirchner method, re-negotiating and restructuring old debt on our own terms, is a partial and imperfect solution. Once the IMF , the Club of Paris, all the various banks and even the vulture funds have been satisfied, there will be a temptation to open Argentina back up to the flow of credit from the north. That credit is the straw that sucks everyone dry. The little bits of cash that come down are just backwash as the major movement is always upward toward the mouth of the beast. Argentina should complete the process of settling its old debts but put the brakes on any plans for new ones. Debt is the strongest set of chains that slavery has ever employed.
I completely agree with #2 Polacandino above. Steer clear of the IMF, World Bank, et al. Form a strong mutual defense pact in the model of NATO (the Defense ministers' meetings in Bolivia this week), and include Central America. Develop mutually favorable economic relationships within South and Central America. Build trade relationships with Africa (i.e. - Lula's remarks this week) and Asia. Allow “the beast” to destroy itself, but never take your eyes off of it.
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