Krugman: Recession May End this Summer

Nobel Laureate Krugman Says Recession May End ‘This Summer’

“I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”
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Even with a recovery, “almost surely unemployment will keep rising for a long time and there’s a lot of reason to think that the world economy is going to stay depressed for an extended period,” Krugman said.

This is somewhat surprising. Krugman was one of those economist screaming the "sky was falling down" a couple of months ago, pressuring the Obama Administration to nationalize banks.

Moreover, Ten Banks that got a government bailout claim they don't need it.

The Treasury is preparing to announce tomorrow it will let 10 banks buy back government shares, people familiar with the matter said, signaling confidence some of the largest U.S. lenders won’t again need a taxpayer rescue.

JPMorgan Chase & Co. is among those cleared to repay Troubled Asset Relief Program funds ... Goldman Sachs Group Inc., American Express Co. and State Street Corp. are also among those that have sold shares and debt unguaranteed by the government ...

So much of the economy is psychological. Market panic feeds on itself.

The two big unknowns now are the labor market and inflation (equities, housing, commodities, and bonds markets seemed to have stabilized). Will it be Japan in the 1990's (flatline economic growth and inflation) or will banks start lending again, expanding the economy and job market? Everybody seems to be afraid of inflation. But if EVERYBODY is afraid, its probably nothing to worry about.