« More downward pressure | Main | Deflation: What Happens When Prices Fall? »

Deflation pressures mounting

Posted by Chris Farrell on Friday, November 21, 2008

Forget the stock market. (Okay, that's hard to do.) But Paul Krugman at the New York Times has a truly scary chart. It's rising real rates--the cost of borrowing is surging.

corporate%20real.png

Krugman has been spot on in his articles. The Fed and the federal government have got to take the rise in real rates seriously.

How sereiously? Under normal circumstances, GM should be allowed to go under. But these are not normal times. The government may want to push GM into bankruptcy, for instance, but then it needs to provide a lot of back-up financing. The private sector certainly won't.

It's time to boost fiscal spending even more.

Comments (1)

Milos Sugovic | Respond
November 21, 2008 2:30 PM

Economic forecasts are clear and so too is the news: consumer and producer prices exhibited a jaw-drop last month in the U.S. and deflation risk is rising. With expectations of a deflation, businesses will find themselves in tough times making tough decisions. And that’ll require rock-solid crisis communication capabilities. It’s absolutely critical to communicate with stakeholders about current and future steps that will help weather the tough times, which I’ve discussed in greater detail at http://peppercomblog.typepad.com/

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Name:

Email Address:

URL:

Remember personal info?

Comments: (you may use HTML tags for style)

Comment preview will appear below. If you are responding to another comment, your response will appear below the original comment when published. Your comment may not appear on the blog until several minutes after it was submitted.

Subscribe to RSS

Latest posts

Iowa prediction market

Credit cards hiking rates and fees

Deflation: What Happens When Prices Fall?

Deflation pressures mounting

More downward pressure

Is deflation in our future?

Gold

Warren Buffett

Voted

Policy and a pint

Topics

Latest comments from recent posts

Deflation pressures mounting (1)
Milos Sugovic wrote: Economic forecasts are clear and so too is the news: consume... [read]

Gold (1)
Jason Pettys wrote: Hi Chris, The subtitle of your blog is, "Helping you manage... [read]

Warren Buffett (1)
Mary Kay Ross wrote: If I have done my math correctly Paul Volcker is 81 years ol... [read]

What caused the Great Depression? (1)
Greg Ransom wrote: De Long is lying about Hayek. Hayek never said "depressions... [read]

Third Bank of the United States? (2)
Gene wrote: Some have call a Third Bank of the United States a Marxist p... [read]

November 2008
S	M	T	W	T	F	S
						1
2	3	4	5	6	7	8
9	10	11	12	13	14	15
16	17	18	19	20	21	22
23	24	25	26	27	28	29
30

Appearances and Worthwhile Events

Policy and a Pint: Health Care Handcuffs

More From
Chris Farrell

Marketplace Money's Money Clip Video

How Alan Helped Ben (BusinessWeek.com)

Other Blogs

Andrew Tobias

Angry Bear

Becker-Posner Blog

Brad DeLong

Cafe Hayek

Calculated Risk

Econbrowser

Economics Unbound

Economists View

Financial Rounds

Finance Roundtable

Greg Mankiw's Blog

Hot Property

Marginal Revolution

New Economist

TaxProf Blog

The Big Picture

Vox Baby