great depression looms

Mainstream economists Ambrose Evans-Pritchard (Telegraph) and Paul Krugman (New York Times) are now saying we are heading for a version of another Great Depression.

Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.
- Ambrose Evans-Pritchard

There is a difference of ruling class opinion about how to deal with the ongoing economic crisis, either to introduce austerity measures (as in Greece and some other Eurozone countries) or to print more money. Both of the above authors advocate more stimulus and are dismayed at the growing trend to austerity measures.

Ambrose Evans-Pritchard, With the US trapped in depression, this really is starting to feel like 1932, 04 Jul 2010

Paul Krugman, The Third Depression, June 27, 2010

Update (12th July 2010): Greenspan Says Economy May Be Undergoing a `Pause'

Former Federal Reserve Chairman Alan Greenspan said the U.S. economy may be undergoing what he called a “pause,” and that he can’t rule out the possibility of a so- called double-dip recession ... Inventory accumulation “has stopped” and production “has flattened out,” the 84-year-old former central banker said.