I seldom contribute to the Krugman adoration/bashing, but come on, Paul!

[wyldwolf]

Can you be a little optimistic? Can you see the glass half full?

In your latest piece, you're correct. Of course you are. But do you have to sound like such a bummer? A robust economy depends, in part, on an electorate that has a good feeling about it. The signs we're seeing, the "glimmers of hope" are real. And if people accept them as real, that contributes to the overall recovery.

I almost believe there's a part of you that hopes the economy stays in the crapper just so you can say, "See? I told you so."

http://www.nytimes.com/2009/04/17/opinion/17krugman.html?_r=1

[polichick]

1. Well, we don't want another irrational exuberance bubble...

We're supposed to be building on rock now, instead of sand ~ and the shiftiest sand of all is Wall Street emotions.

[Phx_Dem]

11. Who said anything about "irrational exuberance?" You just made that up.

It's not difficult to give bad news without scaring the shit out of people or implying the sky is falling and we're all doomed. If you can't see that there is a way to find a balance between the two, that's your problem.

Good thing Krugman doesn't have a policeman's job of notifying a family when their child has been killed. He'd probably pull up in the driveway, honk and scream out the car window, "Hey, you're kid's dead!" Then drive off.

[polichick]

14. The exuberance everyone wants will again be irrational if it's not based on reality. Get it??

[Phx_Dem]

26. No, I don't. No one is calling for exuberance, we're calling for

tempered and constructive criticism. Tempered being the key word. It's very simple to state that the recession is not over and we may see more pain down the road, without screaming like your hair's on fire as Krugman so often does. Actually, I think he does it on purpose so he can show a sharper contrast to the Geithern economic plan that he hates so much, but it's irresponsible.

[ThomCat]

33. As bad as things are, I think he's being incredibly tempered.

I think people are telling him to be more optimistic than the economy warrants. Those "glimmers of hope" haven't turned into anything yet. All it means so far is that things are getting worse at a slower pace.

When we actually get some good news, and we get hiring instead of job loss, or real regulations in the banking industry, or the rate of foreclosures drops down to pre-crisis levels, then we can talk about optimism. That will be when we can START to rebuild.

Until then, you're asking for him to help construct and illusion so we can go back to the house of cards. Irrational exuberance is exactly what it would be.

[girl gone mad]

45. At least Krugman readers won't end up being bagholders.

Can't say the same for the rah-rah crowd.

[DrDan]

2. not his job to cheerlead. He is not a part of the administration.

He is to read the economy and report on it with his learned mind. That is all he is doing.

I don't find it all that negative - only that we are not out of the woods. There are still troubling signs.

Now is not the time to let up and assume we have turned the corner. Not the time to go into a "prevent defense" and coast to a recovery. Proactive measures are still necessary.

[Cha]

23. No, he thinks his job is V

for Vendetta.

[DrDan]

25. how dare he disagree!!!!

[Cha]

27. With his freaking poisonous

fangs.

[ananda]

3. If you want spin and a rosy picture..

.. you will have to accept the verbal manipulations
of the corporate fascists.

Facts and reality, though painful, are indeed a
leftwing bias.

[wyldwolf]

6. "the verbal manipulations of the corporate fascists."

Do you mean this guy?

[elleng]

4. 'History shows

that one of the great policy dangers, in the face of a severe economic slump, is premature optimism. F.D.R. responded to signs of recovery by cutting the Works Progress Administration in half and raising taxes; the Great Depression promptly returned in full force. Japan slackened its efforts halfway through its lost decade, ensuring another five years of stagnation.'

[Thrill]

10. I must have missed Obama taking a victory lap. Paul must of missed Obama's speech

where he pretty much said it wasn't over. There were just glimmers of hope.

Also Obama is a history buff himself. I doubt he needs a lecture on FDR or Japan from anyone.

[mkultra]

40. japans problem was its lack of full stimulus

a mistake Obama has not made.

[Hissyspit]

5. The Nobel committee said the same thing!

Nah, they didn't. I made that up.

[rucky]

7. I agree with his take on Wells and Goldman

it's looking like a case of pump & dump to me.

[uberblonde]

8. The more you know...

The less optimistic you tend to be. Krugman knows a lot!

[asphalt.jungle]

15. that's the thing though

i remember christina romer talking about how the most impressive thing about her new job is that unlike academia she gets the economic data in real time and that's a big step up. they are armed with more data than anyone.

[MarjorieG]

9. We need more stimulus and bailout after stress tests, but he's johnny one note depressing.

I hope we can take apart some of the institutions where necessary, and Citibank or AIG should welcome the opportunity. I don't think they can save themselves without really creative accounting.

He did give admin credit for persistance, saying things will be tough, so let's hope this message gets to the legislators. The real target, I think.

[Maven]

12. It's not his job to blow smoke up the ass of the electorate

Sorry you value propaganda over a sober, honest appraisal of our situation. I don't.

[CTyankee]

13. I really want the truth and it's good for all ofus to be kept on our toes.

As an older person, I find more and more that I demand the cold, unvarnished truth over premature optimism. I like being moderately optimistic, I don't want to be in despair, but at least I can "hope the the best and prepare for the worst." I'll keep on being frugal...

[TexasObserver]

16. Krugman has one setting: WHINE.

He's right more often than he's wrong, but he's still wrong 1/3 of the time.

He's a professional cynic, so when the economy is in trouble, he's right more often than wrong. As the economy improves, he'll be wrong more of the time.

[quiller4]

20. Is disagree. He is right about 50% of the time.

That still makes his record better than many. Still, I don't understand why he takes not account of the biggest stock market recovery since 1934. That doesn't mean that trouble is over but it sure is a bright light in the darkness.

[TexasObserver]

21. Half, 67% ... I consider those numbers close.

Either way, he's not Moses come down from Sinai with the word of God. He's one guy whose opinion was given way too much credit in 2008, and now he's drunk with the adoration of many, most of whom never heard of him before last year.

[TankLV]

71. Um - so far he's been PROVEN right ONE HUNDRED PERCENT of the time on economics...

but go ahead, make up your own opinions as FACTS...

name one thing he was wrong about economically...just one...

[HiFructosePronSyrup]

17. Yeah, he's built this little career out of talking the economy down.

The worst thing that can happen to Paul Krugman is that the economy recovers under Obama.

[redqueen]

18. I'm not seeing what you're seeing...

it seems to me like he's doing us a service here... because I too fear that people will start thinking we're in recovery due to the stock market or whatever. We've got a long way to go and it's good that he's reminding us, IMO.

I'm not sure what he could add that would make it better. I think he's just being realistic.

[Taverner]

19. He's an economist. Remember their mantra: In the long run, we're all dead

Glasses half full do not exist in the world of economics :)

[tblue37]

31. There's a reason why it's called the dismal science. nt

[SanchoPanza]

47. Out of Context

"The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again."
- J.M. Keynes, Tract on Monetary Reform

It was a criticism of the belief that, because economies tend to self-correct over the long-term (particularly in regards to inflation), government intervention in times of contraction was unnecessary.

[PBS Poll-435]

22. Yay! but boo.

;-)

[Alcibiades]

24. depressions are depressing

Hard to sugar-coat the massive failure of Republican economic ideas.

[mkultra]

41. depression?

[Alcibiades]

60. Still waiting for the other shoe to drop

By the time they uncover all the outright fraud on Wall Street, it will be revealed that the country is in deep doo doo, and this will scare off the folks who have been lending us money.

At which point, depression. Technically speaking, we are close to meeting the definition of a depression, which is a downturn in which gdp declines by 10% or lasts 3 or 4 years.

According to the BEA:

"Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- decreased at an annual rate of 6.3 percent in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to final estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent."

We may already be at the beginning of a depression. Much our GDP growth over the last 15 or so years has been from the FIRE sector: now that that growth appears to have been illusory, unsustainable and at least partly (I'd say mainly) fraudulent, it seems likely that the economy will collapse like a Ponzi scheme that has run out of suckers.

Which, it turns out, it has been.

http://economics.about.com/cs/businesscycles/a/depressions.htm

[gizmo1979]

28. I thought the same thing

I like Krugman,but come on Paul cut us a little slack.I mean throw us a bone.I keep listening to him I'll be suicidal in a month.

[ChimpersMcSmirkers]

29. We're not out of the woods, but I think we're getting closer to the edge of the forest...

I'm not a Krugman groupie, but a little caution is ok. With that said, I do think that the more the stock market goes up, the more likely we have hit a bottom in the economy, especially if it doesn't make new lows. The market is a leading indicator. Six or so months out we should starting seeing unemployment ease.

[Tarheel_Dem]

30. Krugman is the reason I'm watching less & less cable. I hate that awful...

hang dog expression of his. Are there any other progressive/moderate economists out there? Are they all singing the same tune as Krugman? I tried hard not to believe that Paul was hanging on to some of his primary angst, but it just became too painful to watch/listen to him. Fortunately, I only watch Keith, and he doesn't seem to be a regular on Countdown, unless Shuster is filling in.

[babylonsister]

32. Krugman-one man's opinion that can, and will, turn on a dime.

He's a famous economist, but so what? There are so many economists, with so many different opinions. :crazy:

[Tarheel_Dem]

35. Agreed. I think he's sought after because he's an "award winning" economist?

If not, I'll be damned if I can figure out why he gets so much play, because he certainly has a face for radio. That, coupled with the fact that he was an Obama nemesis, during the primaries seems to make him even more sought after.
:shrug:

[bbgrunt]

39. ...well, how about Stiglitz, Galbraith, and Kuttner to name 3

liberally slanted economists who all have made statements about the bailouts being a continuation of a wrong-headed B* policy.

[QC]

46. They are enemies of the people. n/t

[Tarheel_Dem]

52. Cool. I'd like to hear more from them, and less about the left's adoration...

of Krugman. I'm not even saying that Krugman is wrong, just that I can't bear to watch or listen to him.

[Robeson]

34. I guess I'm a rarity. I can listen to Krugman and agree with what he says....

...most of the time. Yet, I also know that if Obama followed his advice 100% of he time, he'd be - in the words of Gore Vidal - six feet under in Arlington. I'm the first to admit that pragmatism sometimes sucks. Yet I can't deny it's practicality.

[babylonsister]

38. Thanks for that. I don't know enough about economics, but

know Krugman has been on this new admin's heels. I can't imagine the decisions made have been that bad, but I've been told repeatedly on DU, because of Krugman, that we are screwn.

[Lydia Leftcoast]

36. Oh no! Krugman said something less than worshipful about Obama!

He's not following the Democratic party line! He's turned evil. :sarcasm:

[bbgrunt]

42. Well, how can a recovery be sustainable if

we lose good middle class jobs that aren't replaced? How can we sustain a robust economy on simply service jobs? It's like turning the whole economy into one big casino where nothing is produced but the players vie for a chance to take money away from the other players.....and the scam artists and cheaters and dirty tricksters will be the ones who win the most. Golly, that sounds like what we have had since at least Enron. When the rest of the world realizes this, they will refuse to play with us and our money then loses its value and they won't sell us their goods anymore.

So we need to be able to support solid middle class jobs......but if we keep insourcing and outsourcing and keeping our products uncompetitive due to health care costs borne by businesses, a sustainable recovery looks pretty unlikely.

Paul is telling it like it is.

[girl gone mad]

44. It's casino capitalism, and it's kind of strange that so many DUers..

cheer for its recovery.

[QC]

43. Krugman is an enemy of the people. n/t

[Lydia Leftcoast]

37. I would rather be a pessimist and be pleasantly surprised

than an optimist and have my hopes dashed.

[eridani]

48. In other words, you want another stupid economic bubble right now

We've run out of things to bubblize, and if we don't get jobs with better wages soon, the fundamentals will stay crappy.

[wyldwolf]

50. I'll count you as someone who would rather things stay crappy than to ever admit ...

... Obama's plans might just be working.

[eridani]

53. Bubbles = crappy

Changing the fundamentals = good, or at least not crappy.

[mkultra]

54. you seem incoherent.

Are you high at this moment?

[eridani]

58. Nope. I just think that destroying the real economy to bail out the financial one is idiotic

The very concept of derivatives and other imaginary nonsense supposedly being "worth" many times more than all the real goods and services produced in the world iw what is delusional.

[mkultra]

61. i see, so you have never read adam smith

fact remains that these imaginary financial goods have a very strong and real impact on actual goods. This is the reason why the financial market is so important to our economy. It is one of the reasons why our production capabilities are so much higher than many countries with significantly higher populations.

If you have reached the place where you think that our financial products are worthless compared to real product creation, then i congratulate you on reaching economic education level one.

Please continue.

[eridani]

63. We just need credit and lending, nothing else

In 1955, the financial sector was small and the real economy prospered. Today, it's the other way around. We got along without derivatives just fine. There is no need for it to be legal to make 10,000 different bets that a subprime mortage holder will be able to sell the property before defaulting. the real economy should not be dismantled in order to pay off such bets. The bets themselves should be abolished.

[mkultra]

66. i think the scales of your mind are out of balance

i also notice that you dont provide many numbers and seem to use derivatives as a proxy for all financial products.


In 1960, financial and insurance where 4% of GDP. in 2007, they where 8%. As globalization has been introduced, the "product" of our nation has shifted to financial services by 4%. Lending is what makes production on a large scale possible, large scale production is what makes the American economy 1st world. When people trade debt, they are not creating a trail of debt that collapses the system.


What exactly do you think caused this collapse?

[eridani]

68. How is it that 5 US banks own derivatives that are worth twice the total world GDP --

and 12 times that of the US GDP?

http://online.wsj.com/article/SB123793811398132049-email.html

If you think about it, everything of value we own travels on property paper. At the beginning of the decade there was about $100 trillion worth of property paper representing tangible goods such as land, buildings, and patents world-wide, and some $170 trillion representing ownership over such semiliquid assets as mortgages, stocks and bonds. Since then, however, aggressive financiers have manufactured what the Bank for International Settlements estimates to be $1 quadrillion worth of new derivatives (mortgage-backed securities, collateralized debt obligations, and credit default swaps) that have flooded the market.

These derivatives are the root of the credit crunch. Why? Unlike all other property paper, derivatives are not required by law to be recorded, continually tracked and tied to the assets they represent.

Total GDP of the United States: $14.3 trillion, Total GDP of the WORLD: $78.3 trillion. Why should the real economy be bled to make good on all that totally fraudulent paper?

http://www.engdahl.oilgeopolitics.net/Financial_Tsunami/Geithner_Secret/geithner_secret.html

Today five US banks according to data in the just-released Federal Office of Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activity, hold 96% of all US bank derivatives positions in terms of nominal values, and an eye-popping 81% of the total net credit risk exposure in event of default.

The five are, in declining order of importance: JPMorgan Chase which holds a staggering $88 trillion in derivatives (€66 trillion!). Morgan Chase is followed by Bank of America with $38 trillion in derivatives, and Citibank with $32 trillion. Number four in the derivatives sweepstakes is Goldman Sachs with a ‘mere’ $30 trillion in derivatives. Number five, the merged Wells Fargo -Wachovia Bank, drops dramatically in size to $5 trillion. Number six, Britain’s HSBC Bank USA has $3.7 trillion.

After that the size of US bank exposure to these explosive off-balance-sheet unregulated derivative obligations falls off dramatically. Just to underscore the magnitude, trillion is written 1,000,000,000,000. Continuing to pour taxpayer money into these five banks without changing their operating system, is tantamount to treating an alcoholic with unlimited free booze.

[mkultra]

69. Derivatives are meaningless to the economy as a whole

And are not the cause of the recession. They are in the mix, but they did not cause the housing bubble collapse which caused the credit crunch. Derivatives can be dangerous, but your articles are pointing out the need to regulate derivatives and these articles discuss the World economic problem NOT the US problem.

The fact that they hold derivatives with high nominal value does not equate to anything that could be meaningfully compared to the GDP of the US. All that matters is what share of the GDP is financial based. That answer, like i said, was 8%.

Derivatives are not like normal debt. A housing bubble will not cause a collapse in the derivatives market because derivatives are so widely placed. In fact, i dare say that no kind of bubble, housing or otherwise, will kill derivatives.

The banks are needed to get businesses rolling. The banks collapsed because of massive foreclosures. Foreclosures happened because the CDO market was ramped up while Bernanke raised the overnight lending rate.


so you can blah blah blah all you want about derivatives but they have almost nothing to do with the current crisis.

If your trying to make the point that our economy should be based more on the production of durable goods than on that's fine. Stick with that and well discuss it, but dragging derivatives into the discussion seems pretty buckshot.

[eridani]

70. So why aren't we eliminating CDOs?

They represent nothing meaningful, and the taxpayers should not have to be on the hook for them.

The only fundamental that really matters is the severe decline in family wages over the past 30 years. It doesn't matter whether people can get credit if they can't afford to repay loans. No business will ever get off the ground if few potential customers have any discretionary income, so until that is fixed, it doesn't matter whether they can get credit or not.

[mkultra]

72. I think your view of the problem is from the wrong side

Your trying to solve the volcano problem by sealing up holes in the ground.

You need to decide whether you are for or against debt and borrowing first. I get the impression that you haven't resolved this conflict in your ideology.

[eridani]

73. Debt without the income to back it up due to a 30 year assault--

--on average peoples' living standards is the problem here. Plus shitstains being allowed to make an unlimited number of bets on a mortage based on the assumption that housing prices will always go up.

[Name removed]

49. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Lilith Velkor]

51. Just like the antiwar activists who wanted Iraq to go badly so they could say, "I told you so."

Yep, that's our Kruggie.

:wank: :eyes:

[omega minimo]

56. wow really? let's call them up. Have you got any names or numbers? or just vitriol?

[Lilith Velkor]

57. It's called sarcasm.

I guess the :eyes: smiley was a bit too subtle.

:eyes:

[omega minimo]

55. All the answers to your question are in the piece itself. Just read it again. Thanks for the headsup

[uponit7771]

59. Krugman et al are ignoring the positive signs to their peril, wolf calling isn't professional.

[TheKentuckian]

62. I'm not exactly known as a Krugman cheerleader but he probably is being tempered

I think its probably worse than he is willing to say or even believes. That said, it may be an artificial bubble that gives us the breathing room to lay down a foundation before it all completely crashes out. A false reboot may give us time and resources to address the incredible need for renewable energy and infrastructure that will allow us to load the new OS.

[joshcryer]

64. Did you read his last words?

I would have thought that this piece would have gotten all sorts of Krugman praise.

[joshcryer]

65. Earnings of the Fortune 500 fell 85 percent on last year...

Enough said.

[AZBlue]

67. But there's no press coverage for positive news.