Nobel-prize winning economist Paul Krugman said in remarks published by Bloomberg news service on Tuesday – that “global economic prospects don’t justify the two-month rally that has restored $8.9 trillion to stock markets around the world.”
From Bloomberg: Speculation government spending packages and interest-rate cuts worldwide will reinvigorate the global economy has helped the MSCI World Index rally 37 percent since falling to its lowest since 1995 on March 9. The U.S. Standard & Poor’s 500 Index surged 34 percent in that time.
“It looks to me now as if the markets are now pricing in a rapid recovery, that they’re pricing in a V-shaped recession, which I consider extremely unlikely,” Krugman, 56, said at a forum in Shanghai today. “The market seems to be looking as if this is going to be an average recession, but it’s not.”
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“Some of the measures that have been taken to deal with the crisis seem to be predicated on the belief that this is going to be a short, short recession,” Krugman said today. “Everything says that’s wrong, that this is going to be a sustained period of weakness.”
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