Greece or Japan?

Although the right-wing continues to claim that America is becoming Greece, Nobel Prize-winning economist Paul Krugman says the bigger danger is that we'll become like Japan:

For the past few months, much commentary on the economy — some of it posing as reporting — has had one central theme: policy makers are doing too much. Governments need to stop spending, we’re told. Greece is held up as a cautionary tale, and every uptick in the interest rate on U.S. government bonds is treated as an indication that markets are turning on America over its deficits. Meanwhile, there are continual warnings that inflation is just around the corner, and that the Fed needs to pull back from its efforts to support the economy and get started on its “exit strategy,” tightening credit by selling off assets and raising interest rates.

And what about near-record unemployment, with long-term unemployment worse than at any time since the 1930s? What about the fact that the employment gains of the past few months, although welcome, have, so far, brought back fewer than 500,000 of the more than 8 million jobs lost in the wake of the financial crisis? Hey, worrying about the unemployed is just so 2009.

But the truth is that policy makers aren’t doing too much; they’re doing too little. Recent data don’t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth.

As Krugman points out, the right-wing keeps claiming that inflation is just around the corner. But there's really no sign of that. In fact, the signs point to deflation as a more likely threat. And deflation would be far more dangerous than inflation, since it's much harder to combat.

We should be talking about a new stimulus package, but there doesn't seem to be much chance of that, not with Senate Republicans determined to filibuster everything. And really, it's to their political advantage that unemployment stays high, just as it's to their political advantage that the Democrats fail at accomplishing anything at all.

Well, it hasn't been easy, but the Democrats did pass health care reform. And they seem to be on the verge of passing strong financial reform, too. The GOP couldn't keep their filibuster together on that, not so soon after the recent economic meltdown. I'm hoping that the American people come to their senses, but I've learned not to count on that. So we'll just have to see.

Right now, we seem to have a better government than we deserve. But in a democracy, that can't last. I really wonder what's happened to my country. How did we become such a little people - ignorant, gullible, greedy, superstitious, cowardly, bigoted, and dumb? Not all of us, of course, but way too many. Has a large segment of the population always been like this? Or is it just those people who are getting media attention?