Stop Looking for V-Shaped Recovery

" Whose background. Gold rush stock rally the dollar down deficit growing but a commission will control it and banks on not lending. My next guest says we -- for a slow recovery Ukraine's Galbraith a professor at the University of Texas professor thanks for joining us. Your outlook and his for a a really slow recovering."

" Well I think very powerful stabilizing forces have been at work but I -- too important. Difficulties one is that the credit system remains completely broken. It's not just the banks are unwilling to win this that the borrowers are out there and the household sector which had been the motor of growth doesn't have the collateral to resume borrowing any time soon. And the second thing that's all of this posturing about a pullback of the federal -- all this posturing about the deficit. If not actually translates into policy and too strong spending cuts or even major tax increases. Then that will slow the economy and and called guarantee practically guarantee a very slow. Recovery if not even a double that."

" Can IM tell us about getting back to the good old days from what I mean by that is get back to the days when we had a 1415. Trillion dollar a year economy. The jobless rate was 6%. We will growing fairly consistently at 33 and a half the synod calling that -- good old days you know like a summer and fall of 2007. Any projection when we might get back to that."

" Well from 1929. It took until 1952. Or three before the stock market reached its previous level. I'm not saying that were in the Great Depression but I think we need to realize that the mechanisms that gave us those good old days really don't exist anymore. We had to respond booms in the late 1990s. And in the latter part of this decade one in information technology and the other one and housing. The credit mechanisms that drove those booms were just terribly impaired. By the great crisis of 2008."

" just dropped a bombshell that professor you're making analogy between. Well we on now I'm back to the nineteen thoughts is a prolonged period of high unemployment virtually no growth with a is that a strong analogy of making had direct Paulo."

" Well -- government sector is much larger and so the overall level of the economy is it's this higher and it's more stable. But yes in fact. How we are seeing unemployment and that is now above 10% and continuing to rise. And if you just count out the numbers the number of jobs that we would have to create over five years to get back where we were three years ago with a growing population. Is on the order three million jobs a year. We've never done that before we would need to have it truly exceptional effort again on the new deal scale but scaled up to -- to the economy that we have today. Two begin to put the population back to work in a short period of time."

" I wonder if you just off an academic and erudite comment on what's -- in what is in circulation in the financial world these guys and that is. The possibility of a looming crisis. We've got that Paula spiraling down and that's of value would spiraling but it is down consistently. We've got gold spiking to a new all time high and a deficit that's clearly out of control people toll in terms of a crisis that is imminent. What do you make of that."

" Well I don't think the deficit is out of control I think the deficit is doing the job that it needs to do in a time of high unemployment. The dollar likewise. As it declines that's one of the major forces that supporting the stock market is -- sure you know. Because it raises the dollar value of the earnings of multinational corporations so it looks good on Wall Street. What I worry about is over reaction to those two things if we got a major effort to boost the dollar. They formed the Central Bank buying it or raising interest rates. That would crashed the stock market if we got a major effort to cut the deficit. That would make the unemployment situation much much worse -- so I think that we people who worry too much about these financial and accounting concepts. Are are a major danger to the economy right now."

" Professor James Galbraith I asked for an -- And -- you gave us and we appreciate your being with us today said James -- thank you."