In an interview on Bloomberg.com, Paul Krugman, recent winner of the Nobel Prize for Economics, says that if credit does not start flowing in the next couple of weeks, the results will be catastrophic.
He stated that even though unemployment is already over 6%, we are used to unemployment of 5% or below and that if the markets don’t unfreeze fairly soon, unemployment will almost certainly reach 7%, and more than likely 8%. “There is a calamity happening as we speak,” Krugman said.
“We have a pretty skimpy social safety net.” Along with a prolonged weak job market, he stated that people will lose their health benefits, and their unemployment benefits will expire in a fairly short period of time. “There is going to be a lot of suffering”, Krugman stated.
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