Krugman: Rapid Recovery ‘Extremely Unlikely’
Bloomberg:
Princeton University’s Nobel Prize-winning economist, said global economic prospects don’t justify the two-month rally that has restored $8.9 trillion to stock markets around the world.
Speculation government spending packages and interest-rate cuts worldwide will reinvigorate the global economy has helped the MSCI World Index rally 37 percent since falling to its lowest since 1995 on March 9. The U.S. Standard & Poor’s 500 Index surged 34 percent in that time.
“It looks to me now as if the markets are now pricing in a rapid recovery, that they’re pricing in a V-shaped recession, which I consider extremely unlikely,” Krugman, 56, said at a forum in Shanghai today. “The market seems to be looking as if this is going to be an average recession, but it’s not.”
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Source:
Paul Krugman Says Rapid Recovery ‘Extremely Unlikely’
Patrick Rial and Stephanie Wong
Bloomberg, May 12 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=aE0mkwMWHxQs&
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May 12th, 2009 at 11:25 am
That’s not Krugman, that’s Nouriel Roubini!
May 12th, 2009 at 1:39 pm
In the linked article, Krugman is pretty clearly missing the point. The latest data for stock market dividend futures indicates that investors are currently bidding up stock prices on their expectations that things will stop getting worse, rather than upon hopes for a robust economic recovery. Investors are, right now, expecting things to continue slowly declining through the second quarter of 2010, with a turnaround and very slow recovery beginning in the third quarter of 2010, at the earliest.