An Interview with Paul Krugman: "The risk of long stagnation is really high." Krugman has become very Cassandra-like lately but he has a Nobel Prize so we more or less have to listen to him.
Cassandra, let us recall for the umpteenth time, was right. The false prophets are the ones you don't want to listen to, like the people who told us markets were efficiently self-regulating.
Ironically, although Krugman does confess that part of "the reason why I am so depressed" is that he's not sure that stabilizing the financial market is "sufficient" to ensure economic recovery, he concludes the interview with the most positive appraisal of the current administration that I've heard from him yet.
Will Hutton: And lastly -- you've been critical about Obama. Your view now?
PK: I'm increasingly happy with him. I was unhappy; I think they could have gotten a bigger stimulus coming out the gate. But they've become more forceful. I would have been more aggressive on the banks; we'll see if we need to re-fight that battle later on.
Healthcare is looking really good. I'm getting increasingly optimistic on healthcare reform. Climate change looks like it's going to happen. So my odds that this will in fact be the kind of New Deal I was hoping for are rising. I had my skepticism, but he is smart. He's impressive. And it is such a relief to have somebody whom you can respect in the White House.
(Krugman was visiting the U.K. to deliver three lectures at the London School of Economics. They can be found here.)