Do we need a second stimulus? Nobel Prize winner Paul Krugman thinks so.
If we take a page from history, Japan languished in never-never land for about ten years after the stock market crash of the early 1990s. Its economy remained stagnant. Some analysts say that reason for the stagnation was the lack of enough stimulus to pull it out of recession.
Krugman believes that we are facing a similar situation. Our economy could face a decade of stagnation much like what Japan suffered.
We need another stimulus to really pull us out of the doldrums. Unemployment is way too high, manufacturing is still weak, and retail sales are generally flat. The housing market is still flat, with prices declining. This scenario could very well continue into the foreseeable future.
The banks have been bailed out and want to continue doing business as usual.
There is much talk that the recession is behind us. That may be true, but there is a difference between "saying" the recession over and actually putting 7 million people back to work.
Perhaps its time to rethink another stimulus.
What are your thoughts? Should we have another stimulus?
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