What we really need now is (a) higher spending and lower trade surpluses in surplus nations, China especially but also Germany (b) some big driver of investment, such as green technology. Absent those things, it’s hard to see how we get a durable recovery.I hate to be the spoiler here, but I cannot understand how the implementation of technologies that require huge subsidies just to survive is going to lead to recovery. This is like saying that the Anderson household can lead an economic recovery if we decide to have lots of car repairs and fix the plumbing.
Now, what is my point here? Obviously, if I have to get the car fixed and the plumbing goes bust, that means I have take money from things I had hoped to do (like go on a vacation) in order to do the repairs.
In order to fund "green technologies," we have to cannibalize the healthy and profitable industries to throw money at this perpetual loser, which also gives us inferior fuel and inconsistent electricity flows, something that consumers, if given their own choices, given the real costs, would not purchase these "green technologies" at all.
So, according to Krugman, we cannot have a real recovery unless the government taxes healthy industries and subsidizes unhealthy ones. This is something out of "The Twilight Zone."