Wednesday, December 24, 2008

Paul Krugman writing in a NYT Op-ed, Life Without Bubbles, discussed what he sees as the future of the US economy after the recession and how it cannot return to the recent past. On the chances of the US reducing its trade deficit in the short term, he is no enthusiastic:

...Anyway, the rest of the world may not be ready to handle a drastically smaller U.S. trade deficit. As my colleague Tom Friedman recently pointed out, much of China’s economy in particular is built around exporting to America, and will have a hard time switching to other occupations...

What was this about decoupling? The Economist explained why it is (was?) not a myth back on 6 March 2008.

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