Global Imbalances

I don’t have a prediction, per se, about the likely pace of economic recovery beyond the observation that even the most optimistic scenarios are actually pretty bleak. But what puts me in an optimistic mood is the knowledge that policymakers in the US and around the world and when they meet together globally are all mostly doing good things—this is a big contrast to the Great Depression when the quality of the policymaking was terrible.

What puts me in a pessimistic mood is the knowledge that, as Paul Krugman lays out today, the problem of the global imbalances is still lurking in the background and nobody seems to know what to do about it.