Noble Laureate on Economy & Recession

Prof. Krugman is right in most of the things he said. However I feel he was a bit uncharitable on Henry Paulson. I feel the present situation is because of various factors, and may possibly be in spite of his best efforts, rather than because of him.

President Obama had a choice between pragmatism and populism.For the present he chose populism which is not a good beginning.Salary and bonus caps are not going to contribute to savings in real terms, but if it results in demoralization and, the resultant performance caps from executives. It is going to hit the already hard hit economy . I feel the corporate bosses should be encouraged to walk the extra mile and find means to sell more, which would result in more production, more jobs. More jobs automatically means more buying power, which results more production more jobs .Give buying power to the people, and make them partners in economy recovery. This could be the ideal cycle for recovery.

I do not agree with Prof. Krugman regarding the nationalization of large banks. Bureaucrats running the banks would result in lending in politically sensitive segments and accumulation of Non Performing Assets. Banks should be run by the bankers. The bureaucrats should run the administration properly. Rest will automatically fall in place.

Shyamsunder Panchavati

Please follow the link to view Prof. Krugman’s video

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