Paul Krugman, a heavyweight among world economists, wrote on 27 June:
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression [of the 19th century] than the much more severe Great Depression [of the 1920s and 30s]. But the cost – to the world economy and, above all, to the millions of lives blighted by the absence of jobs – will nonetheless be immense.
To all appearances here in Australasia we are on the way up. New Zealand is slowly climbing out of a deep hole, unemployment has peaked, manufacturing is starting to find its feet again, exports are increasing and the economy growing. But sustained recovery is very dependent on seeing no more surprises from the world economy. So why is Krugman so pessimistic?