Making the most of nothing.

Joseph Stiglitz looks at the political impasse(s) gripping both the US and the EU

All of this makes it more likely that the North Atlantic will enter a double dip, but there is also nothing magic about the number zero. The critical growth rate is that which stops the jobs deficit growing larger. Problematically, America and Europe’s current growth rate of about one per cent is less than half of the amount required to do this.

When the recession began there were many wise words about having learnt the lessons of both the Great Depression and Japan’s long malaise. Now we know we didn’t learn a thing. Our stimulus was too weak, too short and not well designed. The banks weren’t forced to return to lending. Our leaders tried papering over the economy’s weaknesses – perhaps out of fear that if we were honest about them, already fragile confidence would erode. But that was a gamble we have now lost. Now the scale of the problem is apparent, a new confidence has emerged: confidence that matters will get worse, whatever action we take. A long malaise now seems like the optimistic scenario.