Saturday, April 10, 2010

Economist James Galbraith - Say What?

George Soros poured millions of dollars into the Institute of New Economic Thinking conference in Cambridge which is a collaboration of ideas to help prevent crises like the one we have now from repeating.

Bloomberg did a series of interviews. One of them was of James Galbraith. Fairly renowned economist from the University of Texas, just down the road from me. He talked alot about Greece and than at 3:04 he is asked if he will rule out a double dip recession.

His answer was

"I am not looking to a double dip recession because that would require something new and dreadful on top of all the dreadful things that have already occurred."

Say what? First he didn't totally answer the question. Second, he made it sound like he won't consider it because it would simply be to horrible to contemplate something horrible. It is an ostrich response. It may be coming, I am not going to look for it. I just want to put my head into the sand.

Europe went into the weekend with Greece future hanging in the balance (really the whole European Union). I still say Germany won't break but they may bend finding some very short term (few month) patchwork band aide. Be careful of whatever headline comes out. I would bet a bunch of my net worth (if there was a way to do it) that Greece problems will not be solved this weekend (once again short term they may get a little more time). Still think some sort of top (short term or otherwise) is coming and was shorting into the close on Friday. Would not be surprised to see a pop on Monday with some sort of superficial announcement out of Europe before rolling over as the week goes on.

1 comment:

James Galbraith said...

My meaning may not have been as clear as it should have been.

To rephrase: "a double-dip recession seems unlikely to me, because housing and other construction have already collapsed, and it would be hard for them to collapse much farther than they already have. Other forms of spending (such as household consumption) are supported by income flows that come from wages and from government transfers, and these are much more stable. What I fear more, is an inexcusably slow expansion."

By the same token, avoiding a second-dip of the recession should not be considered much of an accomplishment.

Finally, I interpreted the question as referring to the situation in the US. The situation in Europe is very dangerous.