EconomicCrisis.US

Since rolling out his anti-Great Depression policies in 2002, Ben Bernanke has had the dubious distinction of being the major contributor to the worst financial and economic crisis to hit in the post-World War II era. His theory and practice was to fight an enemy that did not exist in 2002 – deflation. As a result, he ended a long period of economic prosperity.

As chairman of the Council of Economic Advisors and a Federal Reserve governor, Bernanke strongly supported policies that pushed the federal funds rate to 1% and inundated banks with liquidity during 2002-2005.
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Global imbalances — roughly defined, the different emphasis the world’s leading economies place on savings, spending and debt — is a phrase much used and little acted upon.

Well before the current financial crisis began, world leaders pledged to address this disconnect. At an International Monetary Fund meeting in 2007, for instance, representatives of the United States and the European Union agreed they should change economic incentives to encourage more savings and less spending; officials speaking for China, Japan and Germany, meanwhile, pledged to take steps to encourage spending. At the end of the day, nothing much happened, and these imbalances helped grease the skids for the global decent toward the economic abyss.
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Recent media stories have chronicled in great detail the events of the last couple of years. A pair of conclusions might be fairly drawn from these early drafts of history. One is that the financial-market turmoil of the last year proved to be of significant consequence to the economy. The second is that the Federal Reserve distinguished itself from historical analogues by taking extraordinary actions to address risks to the economy. Commentators, however, tend to disagree as to whether the extraordinary actions undertaken were to the good or the detriment of the U.S. economy in the long-run.
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Unemployment in the United States will peak only in early 2011 because of a slow and painful recovery from the global economic crisis, Nobel Prize-winning economist Paul Krugman said on Wednesday.

He said the global economy seems to be stabilizing at a level that is “unacceptably poor” and added it is possible that the recession will be a double-dip one.

“(U.S.) unemployment will peak in early 2011 … certainly staying very high and possibly rising all next year,” Krugman told a business meeting in Slovenia, adding his forecast was based on data from previous U.S. economic crises.
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