Going for a lost generation, not a decade

By Dave Anderson:

I enjoy reading Paul Krugman, especially when he is writing within his wheelhouse of liquidity traps, trade and currency crisises.  His piece this morning is an argument that I agree with, namely the basic US macro-problem is not too much debt, but too little in the short term as we look like we won't get back to trend lines for a long time if ever.  

But the truth is that policy makers aren�t doing too much; they�re doing too little. Recent data don�t suggest that America is heading for a Greece-style collapse of investor confidence. Instead, they suggest that we may be heading for a Japan-style lost decade, trapped in a prolonged era of high unemployment and slow growth.

I have one quibble with the piece, and it is a significant quibble.  We have already faced a lost decade for most Americans who can not eat top-line GDP numbers.  The current policy regime and fiscal straitjacket of the deficit hawks may lock in a lost generation, not a lost decade.  My generation has already been screwed this decade, and it looks like we will be compressed on the vise-grips of outdated ideology for the next decade.

Just as the credit crisis and the housing bubble were starting to explode in late 2006 and early 2007, incomes had fallen dramatically.  And they have taken a harder hit since then.  For the decade, income excluding transfer payments (Social Security, unemployment, tax rebates) are several thousand dollars below trend....

>For most young people, I think they have either already experienced a lost decade as the labor market for 20-somethings has never been a booming one unlike the one that I and other older Gen Y'ers saw just as we were entering college, and current college kids and recent graduates are looking at a bleak landscape.  

As a generation, the 18 to 29 year cohort is seeing increasing fixed costs of entry into the middle and professional classes, housing costs that shut out quite a few people from buying, one unpopular war, a broken political system, environmental catastrophe potentially looming, and piss-poor wages...

The next generation has already written off one decade as treading water at best, and we look like we will write off the next generation as well.