Joseph Stiglitz says we need "another big round of real stimulus spending":
Keep shoveling that stimulus, by Joseph Stiglitz , Commentary, Project Syndicate: The green shoots of economic recovery that many people spied this spring have turned brown, prompting concerns about whether the ... fiscal stimulus has failed.
People are asking: Has Keynesian economics been proven wrong, now that it has been put to the test? The question, however, only makes sense if Keynesian economics had really been tried.
Indeed, what is needed now is another dose of fiscal stimulus. If that doesn't happen, we can look forward to an even longer period in which the economy operates below capacity, with high unemployment. ... The problem is that the shock to the economy from the financial crisis was so bad, even Barack Obama's seemingly huge fiscal stimulus has not been enough. ...
The Obama administration erred in asking for too small a stimulus, especially after making political compromises that caused the stimulus to be less effective than it could have been. It made another mistake in designing a bank bailout that gave too much money, with too few restrictions, on too favorable terms to those who caused the economic mess in the first place – a policy that has dampened taxpayers' appetite for more spending.
But that is politics. The economics is clear: The world needs all the advanced industrial countries to commit to another big round of real stimulus spending. ...
I agree that this is needed, and that time is of the essence, but I can't imagine the political climate allowing it to happen unless there is even worse economic news than we've already had, and even then it wouldn't be certain.