Krugman: We're Not Bouncing Back

You know that recovery officials promise is underway? It's not happening, scoffs Paul Krugman, and he blames federal officials' reluctance to take responsibility. "This isn’t a recovery, in any sense that matters. And policy-makers should be doing everything they can to change that fact," he writes in the New York Times. The GDP is rising, but not nearly fast enough to bring down "sky high unemployment," he warns. "All of this is obvious. Yet policy-makers are in denial. Tim Geithner says, 'We're on the road to recovery.' No, we aren't."

Admitting that the economy isn’t recovering would put the Fed "under pressure to do more," writes Krugman. The government needs to engineer mortgage refinancing to help troubled homeowners, and the Fed must consider options like buying more long-term and private debt, pushing down long-term interest rates by keeping short-term rates low, and making it less attractive for businesses to "sit on their cash." At least try something, Krugman argues, instead of watching workers suffer and drawing "smiley faces on a grim picture, convincing nobody." (More Paul Krugman stories.)