On Jan 7, 2009, at 9:31 PM, SA wrote:
> Doug Henwood wrote:
>
>>
>> On Jan 7, 2009, at 8:54 PM, SA wrote:
>>
>>> Sorry for digging this up from the archives, but I just want to
>>> put this on record: I think Roubini is crazy if he thinks
>>> unemployment will peak at 9%. I would be shocked if it didn't get
>>> into double-digits.
>>
>> The latest from Reinhart & Rogoff:
>>
>> <http://www.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf>
>>
>> says you're probably right. An average of 7 point increase in
>> unemployment in the wake of financial crises, which would take us
>> to about 11.5%.
>
> And among the countries in that average, developed countries
> actually had bigger jumps than the developing countries (e.g.,
> Sweden and Finland 1991).
R&R point out that the "developing" countries, particularly those in Asia, recovered more quickly than the "developed" ones, and speculate that greater labor market "flexibility" (i.e., employer freedom to cut wages and speed up the line) and the lack of a social safety net in the poorer countries are responsible. In that sense, the U.S. may be closer to developing Asia than Scandinavia.
Doug