New York Times (NYT) Columnist Paul Krugman, among others, has pointed out that it's way too early to think in terms of ending fiscal/stimulus. The economic expansion has barely begun -- let alone achieved self-sustaining status -- and the premature withdrawal of stimulus increases the likelihood of a double-dip recession, Krugman said.

Further, the view from here argues that investors need to keep in mind that U.S. economic fundamentals have not placed the economy on a steady-growth track -- not yet. What we have is one quarter (Q3 2009) of GDP growth. That's it.

Summer is here and green shoots are popping up everywhere. Paul Krugman calls a recovery by September, a very fast turnaround for someone who has been very bearish. Taiwan exports hit a six-month high last month, sparking hopes that the electronics industry is set for a recovery -- a nice high multiplier economics shift.

Meanwhile, what's good for General Mills (NYS: GIS) is good for America and the cereal maker upped guidance, implying a bottom in consumer staples and that, at the very least, cutbacks in purchases of essentials reported in the latest spending numbers are overblown.

Alex Salkever is the Director of Research at Piqqem.com, a stock prediction and analysis community powered by the Wisdom of Crowds.

Beige book weakness, nationwide. Holiday retail sales tepid at best (so far). Business investment lackluster. And Friday yet another employment situation report from the good statisticians at the U.S. Department of Labor. Consensus: the U.S. economy probably shed another 300,000 jobs in November.

A decade of descent

One can't say we weren't warned about the recession that we're now in - - not with the increased concentration of wealth and concomitant increase in poverty, lack of job creation, and wage stagnation that accompanied the recent economic expansion, to go along with excessive leverage, system-wide.

New York Times (NYSE: NYT) columnist and Nobel Prize-winning economist Paul Krugman provides a little perspective on how we got here and also offers some hope, regarding these trying economic times.

On the signals, or signs, some in economics, corporate, and public policy circles are suggesting that we didn't have any signs of economic trouble ahead. "Why weren't we warned?"

Ah, but you were warned, Krugman said. And these warnings were ignored. Item: Clear signs of a housing bubble, after the dot-com bubble a decade earlier. Item: The implosion, and required dissolving of Long Term Capital Management in 1998 - - just one hedge fund, but one that nevertheless temporarily paralyzed credit markets, globally. Item: The near-universal belief in the market's ability to self-correct, self-police, and if need be, self-punish transgressors, when there was little case precedent to hold that mistaken notion. In sum, there were plenty of warnings, Krugman argues.

One of the major economic debates on Main Street and in Washington concerns the influence of speculators during oil's record price rise. (Oil currently trades above $140 and is up 100% during the past year, and more than 400% since 2000).

More than one Congressional committee is investigating the role of speculators, who critics say have 'distorted' or artificially boosted oil's price -- driven it higher than a level the commodity would trade at if the price were based solely on supply and demand fundamentals.

New York Times columnist Paul Krugman, while not denying speculators have contributed to oil's record rise, nevertheless offers perhaps the strongest evidence regarding how a commodity's price can rise a great deal, without the influence of speculators. His evidence: iron ore.

Paul Krugman's New York Times op-ed tries to defend his Princeton colleague, Federal Reserve Chairman Ben Bernanke. Krugman suggests that inflation is not a problem because he can't find any long-term labor contracts with 11% annual pay increases as in 1981's United Mine Workers contract.

Krugman gets himself into a weak position and he does not disclose his fealty to Bernanke whom he evidently does not believe can defend himself. It seems absurd to pretend that inflation is not a problem. Food prices have tripled and oil prices have doubled as Bernanke cut the Fed funds rate from 5.25% to 2%. Last week Dow Chemical (NYSE: DOW) announced a 20% price increase as did Eastman Kodak (NYSE: EK) in response to rising oil and other commodity prices. Huntsman Chemical (NYSE: HUN) announced a 25% price increase. And consumers -- who account for 70% of GDP growth -- expect inflation to rise at a rate of 7.7%.

New York Times op-editorialist and Princeton Professor Paul Krugman has a point when he talks about how financial innovation created the current credit crisis. (Credit is derived from credere -- the Latin word for belief -- and the absence of belief in the ability of lenders to pay back their loans is the result of this crisis). As he argues, lack of transparency in the pricing of complex financial instruments is partially to blame. But Krugman does not address the most important source of the problem -- how the players get paid.

The financial innovation that Krugman blames for the credit crisis is called securitization, a complex system of connected industries:

• Originators make loans mostly to consumers who want to buy houses, cars, or charge things to a credit card;
• In the case of home loans, mortgage brokers encourage people to borrow based on whatever type of loan the originator will pay the broker the highest commission;
• Investment banks buy bundles of mortgages and other asset-backed securities (ABSs) from the originators;
• Rating agencies compete to get fees from investment banks in exchange for the highest rating; and
• Institutional investors such as hedge funds, pension funds, money market funds and insurance companies buy the ABSs to goose their returns at what they thought was low risk.