Tag Archive: Paul Krugman


Austerity Myth

 

 

 

 

” Europe’s struggles prove that “austerity” fails!

With a condescending sigh, they explain that Europe made deep cuts in government spending, and the result was today’s high unemployment. “With erstwhile middle-class workers reduced to picking through garbage in search of food, austerity has already gone too far,” writes Paul Krugman in The New York Times.

One problem with this conclusion: European governments didn’t cut! If workers pick through garbage, cuts can’t be a reason, since they didn’t happen.

Some European countries tried to reduce deficits by raising taxes. England slapped a 25 percent tax increase on the wealthy, but it didn’t bring in the revenues hoped for. Rich people move their assets elsewhere, or just stop working as much.

Iceland was hit by bank collapses — but government ignored street protests and cut real spending. Iceland’s budget deficit fell from 13 percent of gross domestic product to 3. Iceland’s economy’s is now growing.

Canada slashed spending 20 years ago and now outranks the U.S. on many economic indicators.

Around the same time, Japan went the other way, investing heavily in the public sector in an attempt to jump-start its economy, much as the U.S. did with “stimulus” under President Obama. The result? Japan’s economy stagnated.”

 

 

 

 

 

 

 

 

 

 

Wait! Government Did Cause The Housing Bubble

 

 

 

 

” Regarding the latter example, however, there has been a persistent dispute among mainstream economists about the role of government housing policy, particularly the Community Reinvestment Act which was used, in the 1990s, to make banks increase their lending to particular low-income neighborhoods. Paul Krugman asserts, for example, that the “Community Reinvestment Act of 1977 was irrelevant to the subprime boom.” Actually, no. A new NBER paper (gated) on the CRA is causing quite a stir. Authored by four economists from NYUMIT, Northwestern, and Chicago, the paper is the first to use instrumental-variables regression to distinguish changes in bank lending caused by the CRA from changes that would likely have happened anyway. (The authors use the timing of loan decisions relative to the dates of CRA audits to identify the effect of the CRA on lending.) The results suggest that CRA enforcement did, contra Krugman, lead banks to make substantially riskier loans than otherwise. Raghu Rajan puts it in a very Austrian-sounding way:

The key then to understanding the recent crisis is to see why markets offered inordinate rewards for poor and risky decisions. Irrational exuberance played a part, but perhaps more important were the political forces distorting the markets. The tsunami of money directed by a US Congress, worried about growing income inequality, towards expanding low income housing, joined with the flood of foreign capital inflows to remove any discipline on home loans. And the willingness of the Fed to stay on hold until jobs came back, and indeed to infuse plentiful liquidity if ever the system got into trouble, eliminated any perceived cost to having an illiquid balance sheet.

I’d reverse the order of emphasis — credit expansion first, housing policy second — but Rajan is right that government intervention gets the blame all around.”

 

 

 

 

 

 

 

 

 

Paul Krugman: NRA Is ‘An Insane Organization’

 

 

Krugman

 

” New York Times columnist Paul Krugman on Sunday once again perfectly illustrated the intolerance of America’s liberal media.

Appearing on ABC’s This Week, he said the National Rifle Association is – and I quote! – “an insane organization” (video follows with transcript and commentary):

 

Vain Search For Meaning In Massacre

” For those untouched by death this Christmas, someone else’s bewildering, shattering turn of fate ought to occasion a little modesty and circumspection. Instead, even by its usual execrable standards, the public discourse post-Newtown has been stupid and contemptible. The Left now seizes on every atrocity as a cudgel to beat whatever happens to be the Right’s current hottest brand: Tucson, Arizona, was something to do with Sarah Palin’s use of metaphor and other common literary devices – or “toxic rhetoric,” as Paul Krugman put it; Aurora, Colorado, was something to do with the Tea Party, according to Brian Ross of ABC News. Since the humiliations of November, the Right no longer has any hot brands, so this time round the biens pensants have fallen back on “gun culture.” Dimwit hacks bandy terms like “assault weapon,” “assault rifle,” “semi-automatic” and “automatic weapon” in endlessly interchangeable but ever more terrifying accumulations of high-tech state-of-the-art killing power. As the comedian Andy Borowitz tweeted, “When the 2nd Amendment was written the most lethal gun available was the musket.”

Actually, the semiautomatic is a 19th century technology, first produced in 1885. That’s just under half-a-century after the death of Madison, the Second Amendment’s author, and rather nearer to the Founding Fathers’ time than our own. And the founders were under fewer illusions about the fragility of society than Hollywood funnymen: on July 25, 1764, four Lenape Indians walked into a one-room schoolhouse in colonial Pennsylvania and killed Enoch Brown and ten of his pupils. One child survived, scalped and demented to the end of his days.”

Take That Mr Enron

 How does one get a job being wrong all the time ? Is that a prerequisite for being a Times columnist ? Oh , I guess pomposity is among the requirements as well . 

 

  “Congressman Ron Paul, in a rare head-to-head broadcast confrontation, went up against the Nobel laureate in economics Paul Krugman in an open debate over monetary policy. It was broadcast on the Bloomberg Television, moderated by Trish Regan. Not to put too fine a point on it, Ron Paul won the exchange, so much so that the cameras and moderators just drifted away from Mr. Krugman without so much as a fare-thee-well and left the field to the hero of the campaign for honest money.”