Krugman Uses the D Word

Well it must be official.  If the New York Times' favorite Keynesian (as opposed to their favorite Kenyan) has proclaimed that we are in a depression, then we must be in a depression.  In a Dec 11 editorial column, Krugman wrote:   

It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort.

Personally I reached that conclusion about 5 years ago, but I'm glad that people with high IQ's and many letters after their names are agreeing with me.  Makes me want to go out and predict some more.

Krugman is right that this isn't a "deep depression."  Things aren't as bad as they were for awhile at the depths of the 1930's.  That'll happen when Europe implodes, probably taking several major American banks with it, but probably not until after Christmas.  Expect Europe to disintegrate in earnest in late January or early February.  Until then expect governments to continue to throw their populations under the bus in order to keep the bond speculators happy.  That will last until everyone realizes that there's not enough money on the planet to keep the bond speculators happy.

There is one lone bright spot.  Horizontal drilling combined with hydraulic fracturing has dramatically increased U.S. oil production and is serving to keep a limit on price increases.  The development, particularly of natural gas as a motor fuel, could provide a real boost to the economy.  Of course the EPA is busy trying to screw it up for everyone.  Par for the course.  Some people will not only shoot the goose that lays the golden egg, they'll also fine you for having a dead goose on your property.

My advice is my advice.  Debt is bad.  Saving is good, but lots of banks are going bad, so keep it somewhere else.  Gold and silver good, though we are probably getting ready for another downleg in gold and silver.  And of course God is good.  All the time.