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The Third Depression

THE NEW YORK TIMES- By PAUL KRUGMAN
Published: June 27, 2010

Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. 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.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks — but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

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Police Use Painful New Weapon on G20 Protesters

By Allison Kilkenny, True/Slant. Posted September 28, 2009.

This technology has been deployed in Iraq as an “anti-insurgent weapon” — it could easily be used as a torture tool.

Pittsburgh police demonstrated the latest in crowd control techniques on protesters when they used “sound cannons” to blast the ears of citizens near the G-20 meeting of world economic leaders. City officials said this was the first time such sound blasters, also known as “sound weapons,” were used publicly.

Lavonnie Bickerstaff of the Pittsburgh Bureau of Police uses benign language like “sound amplifiers,” and “long-range acoustic device” to explain the new weapons in an attempt to sanitize what is essentially a painful weapon that leaves no visible marks on its victims. The mob utilized a similar tactic on snitches when they would beat everywhere except the face. If victims have no outward bruises to show, the world is less likely to believe their stories of assault and harassment.

Unlike aerosol hand-grenades, pepper spray, and rubber bullets (all traditional methods of protest suppression also used at the G-20 protests,) the damage from sound cannons is entirely internal, and can only be preserved on video, but even then, the deafening noise cannot be fully appreciated unless one hears it in person.

(Footage of the sound cannons in action can be seen/heard below. It’s clear from these videos that the extremely loud, high-pitched noise causes pain.)

The “long range acoustic device (LRAD)” is designed for long-range communication and acts as an “unmistakable warning,” according to the American Technology Corporation (ATC,) which develops the instruments. “The LRAD basically is the ability to communicate clearly from 300 meters to 3 kilometers” (nearly 2 miles), said Robert Putnam of American Technology’s media and investor relations during an interview with MSNBC. “It’s a focused output. What distinguishes it from other communications tools out there is its ability to be heard clearly and intelligibly at a distance, unlike bullhorns.”

Except, police aren’t trying to send a distress call to allies 2 miles away. They’re literally blasting this extreme decibel of noise directly into the ears of protesters (or any unwitting citizens) standing mere feet from the cannons. Depending on the mode of LRAD, it can blast a maximum sound of 145 to 151 decibels — equal to a gunshot — within a 3-foot (one meter) range, according to ATC. The National Institutes of Health (NIH) reports that permanent hearing loss can result from sounds at about 110 to 120 decibels in short bursts or even just 75 decibels if exposure lasts for long periods.

But there is a volume knob, Putnam notes, so its output can be less than max, purportedly to give us comfort in the knowledge that deafening citizens is left to the discretion of power-hungry police. On the decibel scale, an increase of 10 (say, from 70 to 80) means that a sound is 10 times more intense. Normal traffic noise can reach 85 decibels, reports MSNBC, but these sound cannons cannot be compared to standing beside a busy New York City road.

The BBC reported in 2005 that the “shrill sound of an LRAD at its loudest sounds something like a domestic smoke alarm, ATC says, but at 150 decibels, it is the aural equivalent to standing 30m away from a roaring jet engine and can cause major hearing damage if misused.”

This technology has been deployed in Iraq as an “anti-insurgent weapon,” and the sonic weaponry is also being used on protesters in Honduras. Seattle Weekly reports that this weapon could easily be used as a torture tool if one doesn’t already think this is its only use.

Sonic weaponry is now being deployed domestically to put a chill on free speech. We’re told this is the “humane” way to deal with protesters, but it’s really just a convenient way to suppress citizens without the messy aftereffects of having to explain bullet holes to reporters. A bunch of protesters complaining about ruptured ear drums doesn’t make for dramatic news.

Footage of the sound cannons in action:

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SOURCE

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