Paul Krugman: Economic situation more dire than I thought a week ago

[Kurt_and_Hunter]

Krugman (on KO) says he still doesn't like the bill, but that he supports its passage because he has come to believe that the situation in the credit markets is worse than he had thought a week ago.

Paraphrasing: "It would be nice to spend a month or two working on a better proposal, but we don't have that kind of time."

I really like Krugman. He comes off as having less of an agenda than most and has that all-too-rare desire to be right, rather than merely to be perceived as being right.

[babylonsister]

1. He called it the 'hold your nose' vote. Yes, he's thinking this is necessary. nt

[Skink]

2. Is this because adjustable rate mortgages are coming home to roost?

In October in particular.

[Kurt_and_Hunter]

5. I suspect his short-term concern is LIBOR and TED spread stuff

[anigbrowl]

12. Oh, you mean this?

[grantcart]

22. nope doesn't look good to me but I am an idiot on the technical details

and I used to forward buy dollars on the letters of credit I was exporting but still have no idea of the actual mechanics.

[quiet.american]

3. Krugman rarely calls it wrong. If he thinks this thing needs to get done, so be it. nt

[tomp]

19. there's a list out there of about 200 economists that disagree.

?

[johnaries]

23. Let me guess, they're all Libertarian non-interventionists aka Idiots. nt

[tomp]

27. that's just arrogantly dismissive. nt

[quiet.american]

30. I wonder how many economists it takes to equal one Nobel Prize-winning economist? :)

While I don't dismiss the other economists' views on this, I'm not familiar with their perspectives over a long period of time.

I've been reading Krugman since he started at the NYT. I know he is about as progressive as you can get.

If Krugman (a progressive, Nobel Prize winner in economics) says this bill needs to happen, that gives me pause.

There aren't many in this world whom I would put my stock in, so to speak, Krugman is that rare pundit I do take absolutely seriously.

[tomp]

37. don't get me wrong...

...i don't dismiss krugman. I'm just saying, i've heard it said several times that NOBODY really knows what's going on here and that there are no gurantees. i surely do not have the expertise to arrive at a conclusion on my own. i know it's my political bias but, when i see bush, cheney, and their appointee with strong ties to wall st pushing for something, i run the other way. the only democratic politician who could sway me is dennis kucinich and he's not for it. we'll see what happens in the house. but let's agree that this is an incredibly thorny problem with strong reason for concern on all sides.

[tekisui]

31. I'd be interested in seeing that list.

There are also hundreds of "scientists" who deny global climate change.

[tomp]

35. try this.

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

[stray cat]

4. I'm sure glad no progressives think our economy is in trouble

its such a relief only Bush thinks its in trouble :sarcasm:

[Lex]

6. I tend to trust Krugman.

I too think he tells it like it is.

[GrizzlyMan]

7. I hate the bailout, but I'm with Krugman

People focus too much on Wall Street. The real problem, as Krugman points out, is credit. It's like air to our economy. Right now, if you need a new car, good luck getting a loan. If you want a new house, forget about it. If you want to do some home improvements on your house you're just as likely to get laughed out of the room as you are to get the loan. Beyond that, a good number of small businesses use short term credit to meet their payrolls.

When the credit market dries up, then it would seem the economy comes to a halt.

Whether or not this fixes the credit issue is out of my realm of knowledge but if people can't get credit it seems as though the economy will slow to a halt.

[bullwinkle428]

8. Some DUers were quick to throw him under the bus during the primaries

because he had the temerity to speak out and occasionally criticize something about Obama's proposals, but the guy has been such a solid fighter for progressive economic causes. I guess people can choose to ignore him at their own peril...

[anigbrowl]

11. Frankly, if he were a better economist he'd have seen this a week ago

Color me skeptical of his late conversion. I like him OK, bu tI think of him as a political columnist who was once an economist.

[tomp]

20. or is it heed him at their own peril

i guess we'll see.

[BlooInBloo]

9. Pfft. The ignorant fool should come to DU, where he would learn there's nothing wrong.

[knowledgeispwr]

13. I suppose Krugman is just a sell-out, a fascist

duped, and/or being bribed.

:sarcasm:

[BlooInBloo]

15. There's absolutely NO other possibility.

[TornadoTN]

28. Krugman or the Self-Appointed Economic Experts on DU? Such a tough call

Maybe Krugman will get it through their thick skulls that this isn't merely a bailout for the top on Wall Street. My own company is having some major issues with mid to long term contracts with customers (corporate) who are seeing their lines of credit evaporate or freezes being placed on them because the banks simply do not have the funds on hand to cover.

Somehow I doubt it though. There's no problem, let em' burn! Right, Armchair Economists? :sarcasm:

[BlooInBloo]

36. I don't *doubt* it. I *know* it won't get through their thick skulls. They won't LET it thru.

[justiceischeap]

10. Sounds like Krugman was repeating what Obama said on the Senate floor 2day. n/t

[WorseBeforeBetter]

14. Interesting correction from McDonald's...

Said that they're not having trouble getting credit for capital investments, contrary to what Krugman said. (Keith just mentioned it...)

[hay rick]

16. One data point?

Guess we can draw any line we want on the graph.

[seasat]

17. Krugman was pointing out housing problems three years ago.

Here's part of a column from 2005.

Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn't have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?

Now we're starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone - not just those who own Zoned Zone real estate - should be worried.

Too bad for us that no one paid attention to him and the other liberal economists back then.

[hay rick]

26. Nice catch.

As you have surely noticed, Krugman has been catching a lot of flack around here lately.

[Cha]

18. Wow, Krugman agrees with Obama on

something. I really appreciated Obama's speech in Reno yesterday because it helped me to understand more of what needs to be done right now.

It was one of his best speeches.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7257342

[mucifer]

24. healthcare is their big difference

[tandot]

21. Whom to trust??? Armchair economists on DU or Paul Krugman and

all of the economic experts advising Obama. This is such a hard choice.

:eyes:

[Vattel]

25. so concise and incisive n/t

[HamdenRice]

33. Most of the armchair economists who criticize Krugman aren't economists

or are economically illiterate.

[RichGirl]

39. Neither...I trust movie stars!

Just kidding...but this is cute.
http://kr.youtube.com/watch?v=0vtHwWReGU0

[WinkyDink]

29. Why do I think the big-money WS suits are going to make out like the bandits they are?

[iiibbb]

34. Because they're going to make out no matter which way the wind blows.

That's what defines a fat cat.

[No Elephants]

32. Who would ever have thought that things would be even worse than Bushco told us? Seriously, who

could NOT have seen that coming?

And the three quarters of a trillion will not be anywhere near enough. This is not the last trip to this well, so people better be working on a bill in anticipation of the next trip.

[RichardRay]

38. As I noted to a fellow who was Just Visiting...

Economics is like a baseball game in which each member of both teams has his or her own ball. The ball can be thrown anyplace at anytime. That makes it really difficult to figure out what's going on. You sort of have to decide which player and which ball you want to pay attention to, and then score the game based on that.

Personally, I'll take Krugman most of the time, especially in contrast to others who seem to have decided to throw the ball over the wall into the street rather than put it into play.

[uponit7771]

40. NONE of them say how ANY of this is supposed to STOP house prices from falling from the CURRENT glut

...of inventory.

It doesn't, it just staves it off for a year or two then we'll have to buy THOSE SAME SECURITIES back after house prices fall even more.

[northernlights]

41. I'm trusting Krugman & Obama on this

I know squat about the economy, although I remember thinking when they overturned glass-steagal that we were headed for depression sooner or later.

I think worst case this is a stopgap to try to soften the landing. Instead of one hard crash with many, many people helpless overnight, it's a chance for those of us who did the things we were supposed to do and are still getting creamed to restructure one last time.

One hopeful sign -- I saw 2 "sold" signs on my routine drive just yesterday that weren't there a couple days ago. That was a first in quite a while. If people waiting on the sidelines think we're at or near rock bottom, they'll start buying some of the real estate.

Another good sign (believe it or not) -- when the MSM picks up on a story, it's usually about over. Yesterday CBS/Couric had a segment on a tent city in Reno, with interviews. Personally it sickened me to see how many of these people were about my age -- mid-50s -- who have lost everything except their tents and some clothes. but now that it's hit the MSM, we may be at bottom.

[Supersedeas]

42. but but but but but Lou Dobbs said...

[GeorgeGist]

43. Note to Krugman

capitalism is an

extravagance

, not an

economy.