Nobel Laureate And Bitcoin Critic Paul Krugman Predicts An Economic Recession In 2019 Or 2020
Bitcoin Critic Predicts A Recession
The recession that occurred in the United States in the late 2000s, while over, has left a lasting impact on the financial world with many fearful about a repeat. Now, Paul Krugman, a Nobel prize-winning economist and critic of Cryptocurrency, has come out to warm that we might be headed for another recession this year or next.
“I think that there is a quite good chance that we will have a recession late this year (or) next year,” he said.
What Would Cause It?
Naturally, questions have arisen about this impending recession and what would be the cause. Krugman has listed several potential causes, one of which is the tax cuts that went to effect in the US in 2017. Another reason would be the tech bubble, which Krugman says, however, is reducing. Also, when this potential recession hits, Krugman says that the European Union will be the first to feel its effects.
“The place that looks really close to recession right now is the euro area,” he says.
This comes as no surprise as the European Union is currently in a crunch due to the tumultuous Brexit deal taking place. The European Commission (EC) has echoed similar sentiments in their economic forecasts for the next two years. Initially, a 1.9 percent GDP growth rate was reported in the EuroZone in 2018. This year, it is predicted to be 1.3 percent and next year is expected to be 1.6 percent.
What Would Be The Effects?
One of Krugman’s concerns for the supposed impending recession is that policy-makers will not respond quickly enough to it. This has been a continuous issue in the blockchain industry as lawmakers have yet to fully implement laws to govern blockchain, over a decade since its inception.
“The main concern has always been that we don’t have an effective response if stuff slows down,” Krugman says.
So, where is the role of bitcoin in all of this? Krugman has been famously critical of the crypto, calling it the Long Cryptocon. Interestingly enough, it was the events of the 2008 market crash that inspired the creation of bitcoin but its performance is yet to be tested in such a recession.
Another economist, Nouriel Roubini, shares Krugman’s views and just like him, believes that Europe will see an economic downturn.
“The eurozone is slowing down, and it remains to be seen whether it is heading toward lower potential growth or something worse. The outcome will be determined both by national-level variables – such as political developments in France, Italy, and Germany – and broader regional and global factors,” he says.