Posted this OT question on another post, but looks like folks have moved on to more recent ones. Would appreciate any response to this...thanks.
I've had this question about Mortgage Securitization for some time. Given the expertise of people on this site, I'm hoping to see if I can get a pro/con view on this.
Traditionally, its been "best-practice/golden-rule" for borrowers to go with a 20% down payment. Enforcing this simple rule takes care of quite a few aspects (read risks) of responsible lending/borrowing.
Then, why is it that nobody talks about enforcing lenders, along the same lines, to hold at least 20% of the amount for their loans funded on their balance sheet. They can securitize all day long with the remaining 80%, but we just have to ensure that they have their skin in the game as well.
I've only recently begun to understand the workings of the mortgage industry. Would like to know why this makes or does not make sense. Of course, the main motive is to absolutely prevent situations like the one we are in today.
Krugman means open thread. I'd like to say why I like this site so much.
I am always looking for leading indicators. The problem is that they are so scarce. The stock market used to be one, but not now. MSM used to have some, but not now.
But the dynamic here is a real leading indicator, IMHO. Things are bad and getting worse, much worse than most people think. But maybe not quite as bad as folks here think. That's what a leading indicator does.
I think I understand trends and leading indicators better than most. Leading indicators are especially important at historic turning points (like now) and in Pres. election years (like now). When those coincide, they produce things like FDR and JFK/LBJ.
So, I've tried to put together what this (site) leading indicator is saying with what's happening politically. Voters are shifting very quickly in the direction of the leading edge, where this site is pointing.
There's one candidate especially who is in perfect position to benefit from it, and that is John Edwards. I still don't think he'll beat Hillary. Just surprise by quite a lot and maybe even win.
All but one of the Republican candiates are anti-trend. They're running away from the flow as fast as they can and will pay the price. The exception is Ron Paul. He won't win. But he may become one of the most influential non-winners in American political history, far more so than Perot. The Net can tell you a lot about where America is going, if you keep your ear to the bandwidth. Don't you agree, CR?
"Krugman is peerless . . . the best mind in economics today."
Oh yeah, and try some of this as well:
"No sooner is John Maynard Keynes declared irrelevant for modern economics than some establishment figure declares him the god of the age. It happened again, in the pages of Fortune Magazine (August 17, 1998). The writer was MIT's Paul Krugman, one of the most famous economists alive. His article, "Why Aren't We All Keynesians Yet?" was a hymn of love to the man who made government management of the economy a worldwide practice.
The problem with Krugman's piece is that it is wrong at every point.
Krugman's litany of praise begins with a mischaracterization of Keynes's Economic Consequences of the Peace, a book forecasting the economic consequences of the Versailles Treaty. French Economist Etienne Mantoux demonstrated in 1944 that Keynes was wrong in his details as well as his central thesis.
Keynes predicted that, as a result of the Treaty, iron and steel production in Europe would decline. Instead, it rose. He predicted that German pre-war coal output could not be sustained. It was sustained. He predicted that Germany could not export coal. In fact, it did....
Regarding Keynes's theorizing about later German economic conditions, Krugman fails to point out that Keynes himself recognized that his own policies were more National Socialist than free market. In the Preface to the 1936 German language edition of his General Theory, Keynes told his German readers that his theories were much more suited to a totalitarian state, like the one the Nazis had in place, than to a free market."
"Paul Krugman is not an economist. His colleagues in the economics profession and the editorial board of the Times may call him an economist, but that does not make him one.
This is harsh criticism, I realize, so I must explain my views in full. Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity.
If one can surmise anything from Krugman's columns, it is that he is an unabashed Keynesian. While others in the economics profession have forsaken the Keynesian faith for things like "Rational Expectations" or "Real Business Cycles," Krugman remains true to the Church of John Maynard Keynes"
This guy may be a great economist, but he sure does stick his foot in his mouth, and lose much credibility, every time he lets politics enter his writing. I would caution reading into his commentary on the current market conditions without first considering his deep political bias and personal grudge against any thought/argument/debate not inline with his thinking. Classic egomaniac.
Maybe Hillary is too establishment and has too much baggage to benefit from the Big Bend in American values.
When you see this Bend clearly, it helps to understand many things. For example, all the frenzy about illegal immigrants isn't about immigrants at all. It's about building economic insecurity.
When you get into the Bend, you can see that in a decade or so the Hispanic influence in the U.S. will be enormous, beyond what anybody can now imagine. Without Hispanics, we truly are screwed as a country.
I'd love to see him go one on one with Larry Kudlow. But Larry's too gun shy to invite him on his show, since Krugman pretty much made a fool out of him and his supply side crapola back in the 90's.
Most statists do. You do realize that Keynes, not only championed Hitler and Mussolini, but wrote quite a number of glowing articles for them in the British press.
I completely agree with your Paul Krugman analysis. You know I disagree with LvM in that I think not each and every government intervention in markets is wrong, but if Krugman would have it's way we would be strait on to socialism. Just recently, the eastern part of my country of origin proved again how disastrous that is.
Talking about Lord Keynes: Hitler indeed was a fanatical disciple of Keynes. The Reich recovered from the Great Depression actually faster than the US after 1933 due to some of Hitler's Keynsian policies, however he only used them for armament. When in the course of these policies the Reich became insolvent in 1938, the Nazi's burned the synagogues and confiscated the property of all Jews in Germany. This way they kept the finances afloat until they could start WW2 with the hope of making enough booty to prevent government bankruptcy (among other nasty purposes). Well, we all know how that went.
Anyway, Keynes' teachings were indeed wonderful for the totalitarian Nazi regime. Something Mr. Krugman can really be proud of, I think.
It had to happen. Law and economics professor Vernon L. Smith, of George Mason University, writes in the WSJ: The Clinton Housing Bubble "
Just from a blog post (snicker, at those who want to attack it that way):
"July 25, 2005
Paul Krugman on Toyota, Southerners and the welfare state
Stefan Karlsson
Today's Paul Krugman column is quite interesting, but not because it presents good arguments, but because it contains so many fallacies.
His entire column makes a big deal about a decision by Toyota to build a plant in Canada, which he claims proves the superiority of Canada's somewhat more extensive welfare state compared to the United States. That Toyota has also recently announced new factories in Texas, Kentucky and West Virginia is not mentioned, as it would contradict his "empirical evidence" of how beneficial Canadian welfare statism is."
Start spamming NYT for a retraction. Note I did not advocate that for the windbag CR pointed out, only that others did. Krugman is writing an opinion piece. Most such pieces are very poorly argued in the MSM.
I do not think it is possible to untangle economics from politics (and religion too). It is counterproductive to think so and you end up with economic positions that resemble fundamentalism.
The blossoming of mathematical physics, starting in earnest in the 17th century, got everyone excited about applying similar rigor to human population dynamics in the form of sociology, economics, etc.
The problem is that the proper (just getting by? surviving?) solutions are context (time and culture) dependent.
Most humans really really really hate relativism. It would be nice to have an absolute solution and no more thinking, but that is a pipe dream.
Physics lends itself to mathematical rigor. Human populations, not so much.
Proto-fascist? Man, you are dishonest, miscreant, you right-wing hack.
ahem from the wikipedia on your beloved LvM Institute:
The historical views of the Institute and of several people affiliated with it have been interpreted by some critics, such as the Southern Poverty Law Center, as sympathetic to the Confederacy. The SPLC has criticized the Institute for its "interest in neo-Confederate themes", which SPLC considers to be a form of racism. SPLC has also criticized some members of the Institute for their connections with the League of the South.
So you're the one promoting racism, the confederacy, and Carrot Top. Touche.
" This guy may be a great economist, but he sure does stick his foot in his mouth, and lose much credibility, every time he lets politics enter his writing"
I would rather a quality economist write about the political implications of economic theory than a hack business writer who knows nothing. Kudlow is hack because he statetments are veritably false not be has a viewpoint.
"Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity"
There is no law that says that you have to be a minimalist government type to be an economist. Your view of of the opitamilty of limited goverment is just that - a point of view. Plenty of "real" economists agree with government intervention can often be a good thing. Don't mistake the profession with your biases of what the profession should believe.
What this joker is missing is that the attorneys who create the securities and traunches -- at least some of them, knew they were laughable as investments -- but they can now hide behind safe harbor clauses and plausible deniability.
If you did a bit of research, the argument is that the SPC argues that the Confredrate revolution was about slavery, when the argument was about taxation, and the legal right of States to decouple from the Union. Several Northern States argued the same thing at the time. Keynes explicitly endorced Fascism. Please find any writer at the LvM who advocates slavery.
Whilst my argument is based on fact yours is based on, at best, guilt by association. Very poor.
I dont buy Krugmans position on the falling dollar. He essentially says it doesnt matter if the dollar falls because we hold dollar assets, and foreigners who export to us will eat most of the drop by accepting thinner margins. This seems more like wishful thinking than an economic analysis. Can the dollar fall to zero with no effects? Obviously not. At some point it has to lead to inflation. If the price of Asian goods goes up, we cant immediately buy American because we have allowed our industrial capacity. Where do we get the investment capital to rebuild our industry with such a low savings rate?
By his own admission he is more concerned about the welfare of the Third World than the welfare of the US. No wonder he is not concerned out our currency.
Gentlemen, gentlemen (Ladies, ladies),
I think we can agree that very oppressive governments/oligarchies can be approached from both the "right" and the "left". The most alarming infractions currently have an -R behind them with the -D's exhibiting substantial cowardice. This is how I interpret Ron Paul's popularity. Traditional republicans are starting to look around and say, WTF!
"Physics lends itself to mathematical rigor. Human populations, not so much."
Couldn't agree more. Austrian economics is logic based, not physics/mathematically based. Check it out. Start with Menger, then move to Mises, Hutt, and Hayek. then try some Schumpetor, and round it out with some Hazlitt, and Shostack.
How does the economist you endorsed, who SUPPORTS Fascism = guilt by association.
Silly. However, the silliest thing is to call me a Rebooblikud. My hatred of those cretins exceeds my hatred of the Dumborats by at least a factor of 10 right now.
Wow, can't believe I sat through that whole video (minus the Q&A of course). But several observations:
I was a bit upset that he didn't cite his sources - e.g., we have calculations for that (oh yeah, where did you get them, from the likes of CR)
He copped out on the recession question. By now you all probably know that I think we're going to be, if not already, in a recession. But his answer was a non-answer - 50% chance. Fine if you believe that, but substantiate. Why not address spillovers to consumer spending. After all, with 70% of GDP riding on consumers, at some point that spending might stop (you could even invoke your favorite Stein's rule - if things can't go on forever, they won't)
He missed one golden opportunity in the comparison of the S&L crisis to today. He is correct in pointing out that in the S&L debacle many of the banks held the actual loans. So essentially they lost their depositors' money and the Fed was required to bail them out (via FDIC). But today, the difference is that non-depositories hold a good bunch of this junk which means all the losses will be absorbed directly by the parties involved in the trade, not the gov't. Not only that, but today's crisis is about 6-7 times larger than the S&L crisis.
Other than that though, I have to say I thought he did a fairly ok job providing a braod overview of a really, really complex event.
Misean,
Pardon my ignorance but what years did Keynes endorse fascism? I think timing is important as during the depression many were desperately looking for solutions and many illusions were destroyed. We are only human. I doubt Keynes would be happy with the final results.
Austrian economics might have ideas to offer for certain problems, but as I have been suggesting, not always.
I chafe as much as anybody at the incompetence and corruption of government, but I always am uneasy about the tragedy of the commons. As I am not religious I am particularly sensitive about my protections in this area.
Thanks for posting this. Look at the slide closely. It looks like Blackrock (or their confederates) have agreed to support the fund to keep its A Pool from dropping below $10 billion in assets.
In point 3 I meant to say non-depositories that are not FDIC insured (but that was probably implied). Since that is the case, I believe the direct hit to consumption will be greater since there is no gov't buffer in between the investor and the consumer.
Very good TV show, but I was a little surprised he didnt connect 9/11 to any structural banking changes in the form of liquidity.
Did enjoy the debt deflation thing though!
Re: KUWAIT CITY -- Kuwait is a world away from New Haven, Conn. But when a government investment fund here got a new chief in 2004, one of the first things he did was commission a study of the sophisticated ways Yale University invests its endowment.
It was a sign that Bader Al-Sa'ad intended to shake things up at the huge but sleepy Kuwait Investment Authority.
The investments he has since pursued put his fund at the forefront of far-reaching change in how the oil wealth of the Persian Gulf is deployed. Instead of mostly U.S. Treasury securities, Kuwait now invests in things like higher-yielding bonds, Chinese office buildings and Asian private-equity funds. And, in a move with implications for the strength of the U.S.'s currency and economy, the Kuwait fund is de-emphasizing holdings priced in dollars.
I am amazed at what a poor public speaker Krugman is. His speaking skills are even worse then his writing.
There was a time when Krugman was a well respected academic economist. No more. He is a political hack and has a terrible forecasting record to boot. He declared the economy to be fabulous in January 2000 and was certain there was no sign of recovery in the summer of 2002.
temporary liquidity for investors who needed to meet payrolls.
"making progress with S&P to obtain a rating for Pool A" =
We will keep twisting their arms until they give us triple-A...Well, maybe double-A.
"net redemption activity has significantly taperered"
Not too many investors want to pay a penalty to get access to their liquid funds.
"a very small number of pool participants elected to redeem in excess of their available liquid balance (ABL)"
We (Blackrock) have tradmarked the term ABL. We hope to use it in the future to help bail out many other institutional money market funds in similar trouble.
"roughtly $1.8 million in redemption fees have been collected"
Some counties don't trust us and paid through the nose just to be rid of us.
Geeze, tough crowd tonight. Krugman is an academic economist. If he was managing money, he would have been gone broke many, many years ago.
But it's still interesting to hear the thought process taking place in the Ivory Tower. Don't agree with his politics, but it's good to know what the he's thinking. Thanks for posting CR.
The entire western world admired e.g. Mussolini at first (FDR called him that "admirable italian gentlemen") because of his suppresion of the unions and communists, and his friendliness to business. In fact, Mussolini said that 'fascism' ought to be called 'corporatism', since it was a marriage of government and big business.
Miscreant, er, Misean, is playing the whole 'guilt by association' card, commonly used by people with no other cards in their deck. A lot of the worst tyrants in the world embraced 'laissez-faire', so, what, Friedman supported tyrannies ? right
And please, NO economics, Austrian or otherwise, is based on LOGIC. Economics at its core basically APPLIED SOCIOLOGY/PSYCHOLOGY, with a smattering of math to generate some numbers. Anyone who believes otherwise is a fool.
To me, this one page risk capital has linked speaks volumes about what's going on in Florida.
The power-that-be in Florida threw their hands up and said, here, Blackrock, you take it, it's yours. Just get us out of this mess.
Blackrock sent their Wall Street hotshots down to Florida with a total deaf ear to Florida culture and politics. The tone of their communications couldn't do more to PO a Florida elected official who's just been burned and embarrassed, if they tried. It just reeks of Wall Street arrogance and competent smugness.
Within 12 months, this fund will have zip to do with Florida. It will have disappeared into some Wall Street derivative or other, effectively buried and forgotten. PR mission accomplished.
But at even more cost of growing friction between Wall Street and Main Street. When is Wall Street gonna learn that it kinda sucks to PO all their potential political friends?
I've had this question about Mortgage Securitization for some time. Given the expertise of people on this site, I'm hoping to see if I can get a pro/con view on this.
Repost this earlier tomorrow (AM)when Tanta's around.
I actually referenced my points, perhaps you could do so as well.
What "Tyrants" advocate laissez-faire?
"Miscreant, er, Misean, is playing the whole 'guilt by association' card, commonly used by people with no other cards in their deck."
Would you like to refute or post ad-hominem attacks. You have evidence against my point post it. I posted my evidence and have a boatload more.
"And please, NO economics, Austrian or otherwise, is based on LOGIC."
Again, an assertion without any evidence. Care to come up with a source or two. I've posted more than a number of arguments based on logical analysis of economics over the year. Per haps you could point out how they are not.
Stipanovich, who earned $180,214 in 2006 as executive director of the State Board of Administration, was in New York in confidential meetings with Lehman Brothers Holdings Inc., the largest U.S. underwriter of mortgage-backed bonds. Lehman was proposing ways to help the state manage the risk of its debt investments, according to a letter the bank sent to Stipanovich after the meeting.
What Stipanovich, 58, hadn't told his boss, Florida Chief Financial Officer Alex Sink, was that Lehman Brothers was the same firm that had sold the state fund $842 million of mortgage- backed debt in July and August. Those securities defaulted within four months, and totaled more failing debt than any other bank sold the state, Florida records show. At the time, I never knew it was Lehman Brothers that actually sold us these investments,'' Sink says.
Sink also was unaware that former Florida Governor Jeb Bush, who incorporated Jeb Bush & Associates in February 2007, a month after completing his second term, had been hired as a consultant to Lehman Brothers in June. Bush is the brother of President George W. Bush.
`Do Something Quickly'
In November, school districts and local agencies that kept their cash in the state pool rushed to withdraw $12 billion, or 46 percent, of the money in the fund. On Nov. 29, the state froze the fund to stop all withdrawals.If we don't do something quickly, we're not going to have an investment pool,'' Stipanovich told the board that day.
Until November, the Florida pool was the largest public money market fund in the U.S. It held cash for about 1,000 school districts, towns and local agencies in Florida.
Stipanovich resigned on Dec. 4. He declined to comment.
Florida CFO Sink is riled up about more than Stipanovich. She says JPMorgan Chase & Co. and Lehman Brothers were offloading tainted debt on Florida and other states at a time when those assets were plummeting in value.
The subprime meltdown made front-page news in June, when Bear Stearns Cos. disclosed that two of its hedge funds were collapsing because they were stuffed with subprime collateral. During the next two months, Wall Street firms were quietly peddling mortgage-backed securities to the states.
And the states, eager for higher returns, were buying them.
`It Looks Questionable'
Lehman and the other big players in the market decided they didn't like this stuff in their own accounts,'' Sink says.Where did they drop it and who did they dump it to? It looks questionable to me.''
"But the dynamic here is a real leading indicator, IMHO. Things are bad and getting worse, much worse than most people think. But maybe not quite as bad as folks here think. That's what a leading indicator does."
I agree Rich. I wondered on to this place trying to figure out wtf was going on in housing, and got a point of view that is knowledgeable and substantially different then the msm.
Working backwards from the assumption of a 30% decline in nominal housing prices and thinking about the implications is a different experience from trying to simply extrapolate from where we are today.
Hey- do you really think that any one school of economic thought is good for every community? I'm pretty sure one philosophy isn't or one religion isn't. I've been meaning to ask this for a while.
Misean- doesn't the fact that the science of economics deals with value say that at the bottom logic isn't enough? Isn't value a relatively slippery term? The structure of your arguments may be logically consistent, but any axioms are suspect. (Yes, I know you're a champion debater so I'm looking for a serious answer.)
Looks like the regulars (like at a bar) have now ventured away from the topic they all agree on. i.e the housing fiasco.
The later the argument is carried out, the more vociferous.
Surprising, that different political/economic ideologies had a consensus on the housing stuff.
I've been saying for four years that he's perfectly positioned himself for what's coming. Even if he doesn't win this time around, he's young and his message has been consistent for long enough that he can point back to it when TSHTF.
I'm not sure what I think of him as a leader, but I think he'll have to be reckoned with sometime down the road (or sooner if he makes it out of the early primaries and the economy goes south fast).
Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity.
Is one example enough to falsify your beliefs? Try this one The Unofficial Paul Krugman Web Page
Krugman isn't very original in this column, but I enjoyed his style. He argues starting from the findings of economics that the state should not intervene in the rental market.
Actually no. I'm assuming from your name and posts that yopu are in SD, CA. Well the bubble was big there, but you have to see that the bubble went everywhere. And the bubble was caused by interest rates below the market rate.
If the Rate in SD is higher then Podunk, so what. If both went up that is the issue (and I hate to use the term Podunk).
And no I'm not trying to be a champion debater here, I'm tryibng to let people know that it really doesn't mater where they are...the increase was not rational, and prices are going to fall...
that's about as much help as saying gooonie gooonie goo goo...
you mentioned @home in the prior, it actually reminds me more of the worldcom holders and when many were talked into margining their wcom holdings to buy homes as opposed to selling the shares at the peak of the bubble.
Yes, sbarkkum, that is interesting, and keeps the lights on after last call.
Misean, Im sure youve noted that most Americans conflate Austrian economics with their conception of hard right wingnuts. What else would one expect of the Limbaugh / Streisand Punch and Judy show that passes for political discourse these days? Whos even heard of Rothbard? Hard to give up a two dimensional continuum of name brand political alliances, harder still to defend the right to be left alone. And as for the confederacy, it takes a lot of scholarship to rinse the Battle Hymn of the Republic version of the war between the states. Winners have written the history and every boy and girl in red state or blue is well and truly inculcated with it.
For what its worth from a distant view, I noted that opposition to the current regime was early on cogently accomplished from the limited government standpoint (Ron Paul) than from the vested left. Democrats (with a majority!) continued fecklessness as an opposition should be a lot more discouraging than it seems to be.
Earlier in thread
There is no law that says that you have to be a minimalist government type to be an economist. Your view of of the opitamilty of limited goverment is just that - a point of view. Plenty of "real" economists agree with government intervention can often be a good thing.
No surprises here. Real economists are too often beholden to who is paying the bills, whether it be endowments, industry associations, mainstream media or what have you. minimalist government types got almost nobody to pay the bills. In my book they may be worth more attention simply due to this fact.
while I respect and have leaned from a good many of your posts i must disagree with some of your negative pronouncements about J.M. Keynes.
Yest it is true that he grossly underestimated the speed and degree to which Germany rebounded economically after the first world war. He mis-underestimated (ha) savings and production. Keynes was motivated by a belief that a constructive approach (Marshall plan?) rather than a compensatory-punitive approach to the defeat of Germany would pay dividends to all concerned in the future..
Yes, he was wrong in many of his underlying assumptions though one may argue he was far sighted in his policy prescriptions.
Notwithstanding past errors, Keynes major contribution to economic theory is that he understood laissez faire capitalism might not be able to establish an equilibrium point between demand and supply that would result in anything near full employment. In such a case he said government may have to respond to depression by stimulating demand with deficit speading.
As for Paul Krugman he's not right all the time either. BUT, I would suggest to you that extreme forms of capitalism and socialism each offer us a pernicious system, and at least Krugman understands that. There are places and times and ways in which government should intervene and circumstances when the free market system is best left unbridled.
I am reading the Friedman's article on Bali in NY Times What Was That All About? So to now hear these American technocrats present what was a thoughtful analysis that made sense, flies in the face of what we have come to know about this administration, she added.
A lot of this is the price America is paying for the gratuitous way President Bush trashed the Kyoto treaty in 2001, without presenting any alternative for six years. Message to world: Get lost. We only care about ourselves.
So now, when both Mr. Bush and Congress have moved a little, few people believe even that is for real. As Irwandi Yusuf, the governor of Indonesias Aceh Province, bluntly said to me: We dont believe the Americans in this administration.
If we replace "climate" with "financial products" will this be the same reaction for the next few years.
Further he attacks things with whatever he has available. If Clinton was Moron...err...President, he would be defending him. that's the point. And the point of my reflection on an earlier CR post.
I didn't agree with his falling dollar assessment either. The US imports a lot more than it exports, as seen by our trade deficit. When the dollar weakens, it costs more to buy foreign goods. A pick up in exports alone will not compensate for the weakening dollar as it constitutes only about 10% of GDP. When you add in higher oil prices, a weakening dollar is most certainly a concern for US interests.
So, speaking to this - he says a 30% price correction in housing. Second we are in a period of "debt correction". Same as 30/31 - which prolonged the stockmarket correction of 29.
Are we seeing banks hording cash to offset unknown paper losses? Yup.
Thank you, but I would argue that this is incorrect:
As for Paul Krugman he's not right all the time either. BUT, I would suggest to you that extreme forms of capitalism and socialism each offer us a pernicious system, and at least Krugman understands that."As for Paul Krugman he's not right all the time either. BUT, I would suggest to you that extreme forms of capitalism and socialism each offer us a pernicious system, and at least Krugman understands that."
First Krugman does not off this in his socialist arguments. And Second I would say that free markets allow you to buy what you want. Why is that a bad thing? And I'm willing to allow you to buy ICBM's and Nukes. Just to be REALLY provacative.
Unfortunately I have to get up way early tomorrow...but think about it...why shouldn't you have a 120mm howitzer. Who you gonna use it against? gov't thug's? Blow those bastages into heaven. No problem.
sbarrkum: Looks like the regulars (like at a bar) have now ventured away from the topic they all agree on. i.e the housing fiasco.
The later the argument is carried out, the more vociferous.
"So, speaking to this - he says a 30% price correction in housing. Second we are in a period of "debt correction". Same as 30/31 - which prolonged the stockmarket correction of 29.
Are we seeing banks hording cash to offset unknown paper losses? Yup.
Barley"
Yes, that's the problem. Another Fed orchestrated collapse.
Misean I also run in the same problem you must. If you're making fun of Demos then your audience thinks your a right wing wack-o... and vise versa... The real problem is both sides are so f&@#ed up its to easy not to pick on them...
I like RP's rhetoric But I am not committed to a political solution. I think his campaign is interesting...But RP isn't winning in this environment...and I was a statetist to win.
When you add in higher oil prices, a weakening dollar is most certainly a concern for US interests.
Only if the rest of the world is able to de-couple from the US consumer.
If the US consumer is really the "consumer of last resort" a weakening dollar will have only a minor impact on US core inflation. The majority of the impact will be in the margins of industries dependent on exports to the US.
I agree with misean, and I'm a spittle flecked right wing conservative. Perhaps you all could direct your antipathy towards conservatives towards me, while engaging Misean directly on the issues?
Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent
Um, which state? The Bush Administration?. I don't think so. Former USSR? No way. So just which state does Krugman think is "omniscient and omnipotent"?
Face it, the reason Krugman gets attacked so much is that he's been right about Bush all along, he's been right about Iraq all along, and he's been right about the housing bubble at least since 2005. That's called reality, and the neocons can't stand it any more than a vampire can stand daylight.
CR - Today is the first time in as long as I've been reading your blog (long before the disappearance of the hiking photo at the top, and even before Tanta went from commenter to co-blogger) that I've seen the terms "Shrub" and "Clinton BJ" appear.
One of the greatest things about this community is the intelligence of the commenters and the restraint they have shown in letting their political freak flag fly. Maybe the greatest thing.
Hope tomorrow's different. It could be hard to track down Conjure Bag if he moves to some other blog.
This is a great blog. Bad things are happening and emotions run higher late and/or after some drinking.
Even with the most polar disagreements on this blog, it is encouraging to me that people are giving these issues so much thought. I hope all of you can vote.
Krugman backed away from his stance on rent control in his lengthy NYRB
article "Who was Milton Friedman". Anyone reading that essay would think Krugman was critical of those opposing rent control.
Krugman, the guy who always gets its right? The same guy who earned two published corrections (for outright lies) and a retraction from the NYT's editorial board?
Krugman's greatest fear is that the missing minutes from that Enron board meeting that he was paid $50K to address will suddenly appear.
MLM, obviously those terms weren't used by me. I think Krugman does a pretty good job of explaining a number of current issues in this talk. Nothing earth shattering for most reader of this blog - but I think he explains them well.
I was also interested in his currency crisis remarks and his comments on trade induced inflation. Krugman is an expert in the currency area, and his point about the U.S. debt being in the same currency as U.S. assets is good to remember (also a falling dollar helps many companies balance sheets).
On trade induced inflation, Krugman noted that manufacturers in advanced countries (like Europe and Japan) tend to eat the difference rather than raise their prices much in the U.S. But he was concerned about what would happen if China allowed their currency to rise - that might lead to more inflation.
Also his comments on Iran selling oil in Euros (no impact) make sense.
I'm surprised Krugman has generated so many negative comments. I guess ditto heads read this blog too and are in a funk because Dear Leader has wrecked the country.
Krugman obviously steps on a lot of toes, (he's criticized Obama recently) but for a while, he was the only economist on the left offering a different and sensible point of view. He skillfully debunked supply side economics which drives the WSJ editors nuts. Given the state of politics in this country, his arguments are necessarily as strident as those found on the extreme right end of the spectrum. He's a good counterweight to Kudlow, Glassman, Hasset, and CNBC. He discredited The Maestro and his wacky Ayn Rand followers long before it was in vogue to do so. Like when Sir Allen gave his blessing on tax cuts in early 2001, rather than pay down debt, which destroyed the budget surplus. He has correctly pointed out that the goal of many on the right, like Grover Norquist, who wishes to shrink government small enough to drown in the bathtub, would prefer starve the government solely to destroy the successful social programs. He has also written numerous times about the Social Security 'crises' which isn't, while the current administration is hell bent on scaring the public. But, that's what this administration does best...uses scare tactics.
Based on recent polling, the majority of Americans believe the US is headed in the wrong direction; trickle down economics is not working.
I really hope this blog didn't jump the shark tonight.
Its the internets - it jumps the shark once in a while.
I've been here from very early on - first few months. Snarkiness comes and goes - I mostly ignore it. With the upcoming election it will be harder to ignore. Maybe I'll do more fishing then.
On Keynes & Mise - I think a wise person can learn from both if they don't extrapolate too far from eaches central message.
Keynes had a very simple & short run mechanistic answer to the depression - gov't manipulation of money supply to juice demand - within that constraint 'it worked'. Taken too far (constant on going manipulation) and maybe the cure becomes worse than the disease?
The Austrian answer is not one of 'value' but 'values'... allowing personal economic freedoms even if the choices made from that freedom occasionally leads to ruin.
The irony (I feel) is that if you follow either path dogmatically you end up with the other eventually. Go laissaz faire far enough long enough and eventually a bad cycle puts politicians in place that heavily manipulate. Manipulate heavily long enough and the people cry for 'small gov't and less regulation'. Rinse repeat.
The more rigid the dogma the wider the pendulum swings when the system snaps.
I personally think there is a time & place for moderate manipulation (monetary & fiscal) and reasonable regulation. But there is also a place for economic freedom. The question is how much of either when and where.
It would be good idea for the Austrians & Keynesians to listen to each others actual beliefs and not just debate the straw men or attack the personalities.
Keynes and Marx are the ONLY two economists who came close to getting it right about "capitalism" and all the contrarian BS penned above is just that. BS. They make Milton Friedman look like the vicious, tiny-minded econo-fascist that he was.
My deep insight is to think of economics in terms of fire.
The communist sees a harmless fire in the fireplace, and throws a bucket of water to snuff it out. Fire is dangerous after all, and has killed many men and women.
The libertarian/misean/randian sees a harmless fire in the fireplace, and throws a bucket of kerosene to make it grow much larger. Fire is good after all, and helps us in many ways.
The normal person recognizes that fire can be both and bad, and that it needs to be controlled but not stifled.
The communist sees a harmless fire in the fireplace, and throws a bucket of water to snuff it out. Fire is dangerous after all, and has killed many men and women.
The libertarian/misean/randian sees a harmless fire in the fireplace, and throws a bucket of kerosene to make it grow much larger. Fire is good after all, and helps us in many ways
I am so stealing that.
I'm shocked and awed that so many people are ignoring the most important part of the speech.
And the number of people who really, really hate Krugman is pretty impressive. He didn't even talk politics and only said what most people on this board already know and he's getting the hate.
I would say the Krugman dissers are not the Krugman readers, --not even to the extent that they acknowledge PK referencing this site as one of the best on housing. [They'll show him. They will.)
In the industry, it pretty much goes without a thought that the economists will be "rightwing"...they are being paid to represent company interests. Duh.
In the government, it is no different --in the WH, (the Treasury) and not much different in the FED...and how many "lefty" lobbyists do you think are operating with Congressmen and Senators? There are reasons why wages are going nowhere people.
It is a lonely place to be a "leftwing" economist with access to media. And so how "leftwing" is Krugman"?
Nothing compared to Chomsky.
Kicker - There has never been an economy in the history of the world that has a constant devaluing currency and continues to have economic prosperity. We are a net importer and that puts us at risk. I think it would be very naive to think that a weak currency could somehow help or be good for the US. Its in the worlds economies interest to have countries that spend, and don't save, to have a stronger currency than countries that do save.
I really don't understand the Krugman hate at all. Unless you are a die-hard partisan Republican or a hard-right Libertarian/Austrian/anti-statist I can't imagine the grounds for complaint. Please show me a pundit with a better record than Krugman. I have seen no criticism at all of Krugman in this thread that holds any water etc, particularly that coming from mini-Mises. "Krugman believes in an omnipotent state." ????
a) how many Central and South American, and Asian, dictators simply allowed business to come in and run the country, aided and abetted by the government ? one of the closest things to laissez-faire we've seen. So, did Friedman support these dictatorships ?
of course not - they used his ideas to devious ends. Same thing happened to Keynes, Marx, and many mnay others.
b) economics can NOT be based on logic (in the only "sense" that makes sense, namely mathematical) since it always refer to human behaviour, which is certainly not logical. Oh, economists claim to base their ideas on "logic", whcih is really their assumptions about how people behave under various cicurmstances, and how it comes otgether as a whole. They are rough MODELS of human behaviours applied to the economy, as all generalized models of behaviour are necessarily rough.
One can apply mathematics to these MODELS to allow calculations, predictions, etc, but these models are in no way based on mathematical logic.
that is obvious enough. and BTW, economists like Keynes and Galbraith and others recognized this -JKG has a great quote on economists and their models that I'll try to find.
so, again, anyone who believes that their 'economics' is based on mathematical logic is fooling him/herself, and everyone else. their is nothing ad-hominem about that - it's simply logical
Anyone who posts things to the effect of, "you are a fascist, cheers", should be rigorously ignored.
That sort of slap in the face with an arrogant smirk is a clear indicator that nothing useful can come from conversation because the person who does it is primarily interested in making you angry.
Mini-Mises: "Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity."
The above paragraph appears to have been written by an 18 year old who has just read Atlas Shrugged for the first time.... it displays not even the most rudimentary understanding of the issues of economics and public policy.
Only someone with very limited exposure to economics would speak of the imaginary "laws of economics". I have a terminal Master's in Economics from one of the best universities in Canada and I've never heard of these "laws". (Economics deals in models, not "laws").
If you are going to post stuff from Paul Krugman, then you should post stuff from people who are on the other end of the political spectrum.
I only listen to people like Krugman if I don't completely understand the extreme Democratic/Liberal position. I don't think that Krugman belongs here.
In his Google talk, Krugman disavows policy solutions to the current crises.
He says, in short, let housing wash out. Let investors go bust, banks go down. We'll see who has solvency later and go on from there.
I disagree with none of that (and I agree with CR that Krugman is an admirable populizer of a difficult topic). But where I find him tepid -- indeed, Clintonian-centrist tepid -- is that he only sees a regulatory revival if the whole system goes down the tubes. "I'm not sure," says the terror of the Times, "we're ready to admit the market isn't sometimes right."
What I'm first?
Read his "Age of Diminished Expectations" back in the early 1990s. What a collosal waste of time. The guy was like 20 years off the mark.
Krugman is peerless . . . the best mind in economics today.
Shame on me, perhaps ou'd have been better served by James Glassman's "Dow 36,000".
I love google....
Lame intro.
Posted this OT question on another post, but looks like folks have moved on to more recent ones. Would appreciate any response to this...thanks.
I've had this question about Mortgage Securitization for some time. Given the expertise of people on this site, I'm hoping to see if I can get a pro/con view on this.
Traditionally, its been "best-practice/golden-rule" for borrowers to go with a 20% down payment. Enforcing this simple rule takes care of quite a few aspects (read risks) of responsible lending/borrowing.
Then, why is it that nobody talks about enforcing lenders, along the same lines, to hold at least 20% of the amount for their loans funded on their balance sheet. They can securitize all day long with the remaining 80%, but we just have to ensure that they have their skin in the game as well.
I've only recently begun to understand the workings of the mortgage industry. Would like to know why this makes or does not make sense. Of course, the main motive is to absolutely prevent situations like the one we are in today.
Shame on Me,
Your better off reading this:
http://www.mises.org/journals/scholar/shostak2.pdf
Cheers,
Looks like they (google) have the macro-econ Knol rapped up.
I think we should nominate Tanta and CR for their respective aptitudes...
Official Google Blog: Encouraging people to contribute knowledge
"I invented currency crises...not the thing itself, but the academic field actually in 1979 and ever since, business has been good." LOL
ok,
Krugman means open thread. I'd like to say why I like this site so much.
I am always looking for leading indicators. The problem is that they are so scarce. The stock market used to be one, but not now. MSM used to have some, but not now.
But the dynamic here is a real leading indicator, IMHO. Things are bad and getting worse, much worse than most people think. But maybe not quite as bad as folks here think. That's what a leading indicator does.
I think I understand trends and leading indicators better than most. Leading indicators are especially important at historic turning points (like now) and in Pres. election years (like now). When those coincide, they produce things like FDR and JFK/LBJ.
So, I've tried to put together what this (site) leading indicator is saying with what's happening politically. Voters are shifting very quickly in the direction of the leading edge, where this site is pointing.
There's one candidate especially who is in perfect position to benefit from it, and that is John Edwards. I still don't think he'll beat Hillary. Just surprise by quite a lot and maybe even win.
All but one of the Republican candiates are anti-trend. They're running away from the flow as fast as they can and will pay the price. The exception is Ron Paul. He won't win. But he may become one of the most influential non-winners in American political history, far more so than Perot. The Net can tell you a lot about where America is going, if you keep your ear to the bandwidth. Don't you agree, CR?
Rich I largely agree with what you said, with the caveat that Hillary will not be the Dem nominee.
May be Edwards, may be Obama. I agree that Edwards is best positioned in the downward spiral that is the US economy. But it won't be Hillary.
"Krugman is peerless . . . the best mind in economics today."
Oh yeah, and try some of this as well:
"No sooner is John Maynard Keynes declared irrelevant for modern economics than some establishment figure declares him the god of the age. It happened again, in the pages of Fortune Magazine (August 17, 1998). The writer was MIT's Paul Krugman, one of the most famous economists alive. His article, "Why Aren't We All Keynesians Yet?" was a hymn of love to the man who made government management of the economy a worldwide practice.
The problem with Krugman's piece is that it is wrong at every point.
Krugman's litany of praise begins with a mischaracterization of Keynes's Economic Consequences of the Peace, a book forecasting the economic consequences of the Versailles Treaty. French Economist Etienne Mantoux demonstrated in 1944 that Keynes was wrong in his details as well as his central thesis.
Keynes predicted that, as a result of the Treaty, iron and steel production in Europe would decline. Instead, it rose. He predicted that German pre-war coal output could not be sustained. It was sustained. He predicted that Germany could not export coal. In fact, it did....
Regarding Keynes's theorizing about later German economic conditions, Krugman fails to point out that Keynes himself recognized that his own policies were more National Socialist than free market. In the Preface to the 1936 German language edition of his General Theory, Keynes told his German readers that his theories were much more suited to a totalitarian state, like the one the Nazis had in place, than to a free market."
Ludwig von Mises Institute
And:
"Paul Krugman is not an economist. His colleagues in the economics profession and the editorial board of the Times may call him an economist, but that does not make him one.
This is harsh criticism, I realize, so I must explain my views in full. Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity.
If one can surmise anything from Krugman's columns, it is that he is an unabashed Keynesian. While others in the economics profession have forsaken the Keynesian faith for things like "Rational Expectations" or "Real Business Cycles," Krugman remains true to the Church of John Maynard Keynes"
Mises Daily Archives - Mises Institute
Cheers,
Didn't he used to be an economist before BDS? Now he only speaks in lefty friendly places.
This guy may be a great economist, but he sure does stick his foot in his mouth, and lose much credibility, every time he lets politics enter his writing. I would caution reading into his commentary on the current market conditions without first considering his deep political bias and personal grudge against any thought/argument/debate not inline with his thinking. Classic egomaniac.
Gary,
Maybe Hillary is too establishment and has too much baggage to benefit from the Big Bend in American values.
When you see this Bend clearly, it helps to understand many things. For example, all the frenzy about illegal immigrants isn't about immigrants at all. It's about building economic insecurity.
When you get into the Bend, you can see that in a decade or so the Hispanic influence in the U.S. will be enormous, beyond what anybody can now imagine. Without Hispanics, we truly are screwed as a country.
I may only have a BA in Econ, and not an advanced degree, but I'll take Keynes over Milton Friedman any day of the week and twice on Sunday.
As for Krugman's pundit position, I'll take his analysis over the mendacious hack Samuelson any day as well.
I'd love to see him go one on one with Larry Kudlow. But Larry's too gun shy to invite him on his show, since Krugman pretty much made a fool out of him and his supply side crapola back in the 90's.
Misean good post. I got the quivers when he mentioned a national health plan in the google piece.
the "structured high interest trust" was classic none the less....
As you say, Cheers
Gary,
Most statists do. You do realize that Keynes, not only championed Hitler and Mussolini, but wrote quite a number of glowing articles for them in the British press.
LOL.
Cheers,
Ooh, the insinuation of fascism argument.
Godwin's Law violation!
Misean:
I completely agree with your Paul Krugman analysis. You know I disagree with LvM in that I think not each and every government intervention in markets is wrong, but if Krugman would have it's way we would be strait on to socialism. Just recently, the eastern part of my country of origin proved again how disastrous that is.
Talking about Lord Keynes: Hitler indeed was a fanatical disciple of Keynes. The Reich recovered from the Great Depression actually faster than the US after 1933 due to some of Hitler's Keynsian policies, however he only used them for armament. When in the course of these policies the Reich became insolvent in 1938, the Nazi's burned the synagogues and confiscated the property of all Jews in Germany. This way they kept the finances afloat until they could start WW2 with the hope of making enough booty to prevent government bankruptcy (among other nasty purposes). Well, we all know how that went.
Anyway, Keynes' teachings were indeed wonderful for the totalitarian Nazi regime. Something Mr. Krugman can really be proud of, I think.
O-Joe
And let's go back a few posts:
" The Clinton Housing Bubble?
It had to happen. Law and economics professor Vernon L. Smith, of George Mason University, writes in the WSJ: The Clinton Housing Bubble "
Just from a blog post (snicker, at those who want to attack it that way):
"July 25, 2005
Paul Krugman on Toyota, Southerners and the welfare state
Stefan Karlsson
Today's Paul Krugman column is quite interesting, but not because it presents good arguments, but because it contains so many fallacies.
His entire column makes a big deal about a decision by Toyota to build a plant in Canada, which he claims proves the superiority of Canada's somewhat more extensive welfare state compared to the United States. That Toyota has also recently announced new factories in Texas, Kentucky and West Virginia is not mentioned, as it would contradict his "empirical evidence" of how beneficial Canadian welfare statism is."
http://blog.mises.org/blog/archives/003877.asp
Start spamming NYT for a retraction. Note I did not advocate that for the windbag CR pointed out, only that others did. Krugman is writing an opinion piece. Most such pieces are very poorly argued in the MSM.
Cheers,
Gary,
You're supporting a proto-fascist, not me.
Cheers,
I do not think it is possible to untangle economics from politics (and religion too). It is counterproductive to think so and you end up with economic positions that resemble fundamentalism.
The blossoming of mathematical physics, starting in earnest in the 17th century, got everyone excited about applying similar rigor to human population dynamics in the form of sociology, economics, etc.
The problem is that the proper (just getting by? surviving?) solutions are context (time and culture) dependent.
Most humans really really really hate relativism. It would be nice to have an absolute solution and no more thinking, but that is a pipe dream.
Physics lends itself to mathematical rigor. Human populations, not so much.
Proto-fascist? Man, you are dishonest, miscreant, you right-wing hack.
ahem from the wikipedia on your beloved LvM Institute:
The historical views of the Institute and of several people affiliated with it have been interpreted by some critics, such as the Southern Poverty Law Center, as sympathetic to the Confederacy. The SPLC has criticized the Institute for its "interest in neo-Confederate themes", which SPLC considers to be a form of racism. SPLC has also criticized some members of the Institute for their connections with the League of the South.
So you're the one promoting racism, the confederacy, and Carrot Top. Touche.
O-Joe,
Are you German?
red pill, 100% agreement.
" This guy may be a great economist, but he sure does stick his foot in his mouth, and lose much credibility, every time he lets politics enter his writing"
I would rather a quality economist write about the political implications of economic theory than a hack business writer who knows nothing. Kudlow is hack because he statetments are veritably false not be has a viewpoint.
"Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity"
There is no law that says that you have to be a minimalist government type to be an economist. Your view of of the opitamilty of limited goverment is just that - a point of view. Plenty of "real" economists agree with government intervention can often be a good thing. Don't mistake the profession with your biases of what the profession should believe.
What this joker is missing is that the attorneys who create the securities and traunches -- at least some of them, knew they were laughable as investments -- but they can now hide behind safe harbor clauses and plausible deniability.
O-Joe,
Are you German?
Red Pill
Born and raised close to the Dutch border. Married a wonderful girl from New York and live now in Arizona.
O-Joe
Gary,
If you did a bit of research, the argument is that the SPC argues that the Confredrate revolution was about slavery, when the argument was about taxation, and the legal right of States to decouple from the Union. Several Northern States argued the same thing at the time. Keynes explicitly endorced Fascism. Please find any writer at the LvM who advocates slavery.
Whilst my argument is based on fact yours is based on, at best, guilt by association. Very poor.
Cheers,
I dont buy Krugmans position on the falling dollar. He essentially says it doesnt matter if the dollar falls because we hold dollar assets, and foreigners who export to us will eat most of the drop by accepting thinner margins. This seems more like wishful thinking than an economic analysis. Can the dollar fall to zero with no effects? Obviously not. At some point it has to lead to inflation. If the price of Asian goods goes up, we cant immediately buy American because we have allowed our industrial capacity. Where do we get the investment capital to rebuild our industry with such a low savings rate?
By his own admission he is more concerned about the welfare of the Third World than the welfare of the US. No wonder he is not concerned out our currency.
florida pool update-
https://www.sbafla.com/pool/pdf/071218BlackRockLGIPUpdate.pdf
Gentlemen, gentlemen (Ladies, ladies),
I think we can agree that very oppressive governments/oligarchies can be approached from both the "right" and the "left". The most alarming infractions currently have an -R behind them with the -D's exhibiting substantial cowardice. This is how I interpret Ron Paul's popularity. Traditional republicans are starting to look around and say, WTF!
Red Pill,
"Physics lends itself to mathematical rigor. Human populations, not so much."
Couldn't agree more. Austrian economics is logic based, not physics/mathematically based. Check it out. Start with Menger, then move to Mises, Hutt, and Hayek. then try some Schumpetor, and round it out with some Hazlitt, and Shostack.
I have some links to some of these on this page.
Cheers,
Your argument was based on guilt by association. You are a dishonest hack. I am done with you.
Gary,
How does the economist you endorsed, who SUPPORTS Fascism = guilt by association.
Silly. However, the silliest thing is to call me a Rebooblikud. My hatred of those cretins exceeds my hatred of the Dumborats by at least a factor of 10 right now.
Cheers,
Wow, can't believe I sat through that whole video (minus the Q&A of course). But several observations:
Other than that though, I have to say I thought he did a fairly ok job providing a braod overview of a really, really complex event.
Mises:
You're full of fried crap. Sell your-facts-am-as-good-as-anyone's to Free Republic or LittleGreenFootballs.
Or are you just inconsolable that Keynes scored the unimpeachable last word in economics...you know, about the long run?
Misean,
Pardon my ignorance but what years did Keynes endorse fascism? I think timing is important as during the depression many were desperately looking for solutions and many illusions were destroyed. We are only human. I doubt Keynes would be happy with the final results.
Austrian economics might have ideas to offer for certain problems, but as I have been suggesting, not always.
I chafe as much as anybody at the incompetence and corruption of government, but I always am uneasy about the tragedy of the commons. As I am not religious I am particularly sensitive about my protections in this area.
Thanks for posting this. Look at the slide closely. It looks like Blackrock (or their confederates) have agreed to support the fund to keep its A Pool from dropping below $10 billion in assets.
Misean
Come to think, you too!
Two clarifications from what I said above:
Point 1 was really only a minor quibble
In point 3 I meant to say non-depositories that are not FDIC insured (but that was probably implied). Since that is the case, I believe the direct hit to consumption will be greater since there is no gov't buffer in between the investor and the consumer.
Hovnanian's losses quadruple - Homebuilder reports huge loss...
Business, financial, personal finance news - CNNMoney.com
Very good TV show, but I was a little surprised he didnt connect 9/11 to any structural banking changes in the form of liquidity.
Did enjoy the debt deflation thing though!
Re: KUWAIT CITY -- Kuwait is a world away from New Haven, Conn. But when a government investment fund here got a new chief in 2004, one of the first things he did was commission a study of the sophisticated ways Yale University invests its endowment.
It was a sign that Bader Al-Sa'ad intended to shake things up at the huge but sleepy Kuwait Investment Authority.
The investments he has since pursued put his fund at the forefront of far-reaching change in how the oil wealth of the Persian Gulf is deployed. Instead of mostly U.S. Treasury securities, Kuwait now invests in things like higher-yielding bonds, Chinese office buildings and Asian private-equity funds. And, in a move with implications for the strength of the U.S.'s currency and economy, the Kuwait fund is de-emphasizing holdings priced in dollars.
On HOV . . .ouch. They are big in my native NJ, which already saw Kara Homes as among the first HB casualties.
I am amazed at what a poor public speaker Krugman is. His speaking skills are even worse then his writing.
There was a time when Krugman was a well respected academic economist. No more. He is a political hack and has a terrible forecasting record to boot. He declared the economy to be fabulous in January 2000 and was certain there was no sign of recovery in the summer of 2002.
"borrowing program with Wachovia" =
temporary liquidity for investors who needed to meet payrolls.
"making progress with S&P to obtain a rating for Pool A" =
We will keep twisting their arms until they give us triple-A...Well, maybe double-A.
"net redemption activity has significantly taperered"
Not too many investors want to pay a penalty to get access to their liquid funds.
"a very small number of pool participants elected to redeem in excess of their available liquid balance (ABL)"
We (Blackrock) have tradmarked the term ABL. We hope to use it in the future to help bail out many other institutional money market funds in similar trouble.
"roughtly $1.8 million in redemption fees have been collected"
Some counties don't trust us and paid through the nose just to be rid of us.
Geeze, tough crowd tonight. Krugman is an academic economist. If he was managing money, he would have been gone broke many, many years ago.
But it's still interesting to hear the thought process taking place in the Ivory Tower. Don't agree with his politics, but it's good to know what the he's thinking. Thanks for posting CR.
It is amazing how many people are mad at Krugman for being right about george bush. From 1999 on to today.
The entire western world admired e.g. Mussolini at first (FDR called him that "admirable italian gentlemen") because of his suppresion of the unions and communists, and his friendliness to business. In fact, Mussolini said that 'fascism' ought to be called 'corporatism', since it was a marriage of government and big business.
Miscreant, er, Misean, is playing the whole 'guilt by association' card, commonly used by people with no other cards in their deck. A lot of the worst tyrants in the world embraced 'laissez-faire', so, what, Friedman supported tyrannies ? right
And please, NO economics, Austrian or otherwise, is based on LOGIC. Economics at its core basically APPLIED SOCIOLOGY/PSYCHOLOGY, with a smattering of math to generate some numbers. Anyone who believes otherwise is a fool.
freddyinP'town,
Perhaps you don't understand. i would no more load free republic, than Irational Refuse Online. I'd rather read antiwar.com and the dailykos.
But that does not mean I agree with socialist solutions.
I did not vote for Shrubboy and D-head...ever. Last election I voted for Kucinich...in the primary.
You all gotta get out of your silly partisan minds.
This isn't a football game...it's life and death.
Cheers,
florida pool update-
https://www.sbafla.com/pool/pdf/
To me, this one page risk capital has linked speaks volumes about what's going on in Florida.
The power-that-be in Florida threw their hands up and said, here, Blackrock, you take it, it's yours. Just get us out of this mess.
Blackrock sent their Wall Street hotshots down to Florida with a total deaf ear to Florida culture and politics. The tone of their communications couldn't do more to PO a Florida elected official who's just been burned and embarrassed, if they tried. It just reeks of Wall Street arrogance and competent smugness.
Within 12 months, this fund will have zip to do with Florida. It will have disappeared into some Wall Street derivative or other, effectively buried and forgotten. PR mission accomplished.
But at even more cost of growing friction between Wall Street and Main Street. When is Wall Street gonna learn that it kinda sucks to PO all their potential political friends?
sumDyood | 12.18.07 - 8:45 pm | #
I've had this question about Mortgage Securitization for some time. Given the expertise of people on this site, I'm hoping to see if I can get a pro/con view on this.
Repost this earlier tomorrow (AM)when Tanta's around.
marcello,
I actually referenced my points, perhaps you could do so as well.
What "Tyrants" advocate laissez-faire?
"Miscreant, er, Misean, is playing the whole 'guilt by association' card, commonly used by people with no other cards in their deck."
Would you like to refute or post ad-hominem attacks. You have evidence against my point post it. I posted my evidence and have a boatload more.
"And please, NO economics, Austrian or otherwise, is based on LOGIC."
Again, an assertion without any evidence. Care to come up with a source or two. I've posted more than a number of arguments based on logical analysis of economics over the year. Per haps you could point out how they are not.
Cheers,
Enjoyed this:
Stipanovich, who earned $180,214 in 2006 as executive director of the State Board of Administration, was in New York in confidential meetings with Lehman Brothers Holdings Inc., the largest U.S. underwriter of mortgage-backed bonds. Lehman was proposing ways to help the state manage the risk of its debt investments, according to a letter the bank sent to Stipanovich after the meeting.
What Stipanovich, 58, hadn't told his boss, Florida Chief Financial Officer Alex Sink, was that Lehman Brothers was the same firm that had sold the state fund $842 million of mortgage- backed debt in July and August. Those securities defaulted within four months, and totaled more failing debt than any other bank sold the state, Florida records show. At the time, I never knew it was Lehman Brothers that actually sold us these investments,'' Sink says.
Sink also was unaware that former Florida Governor Jeb Bush, who incorporated Jeb Bush & Associates in February 2007, a month after completing his second term, had been hired as a consultant to Lehman Brothers in June. Bush is the brother of President George W. Bush.
`Do Something Quickly'
In November, school districts and local agencies that kept their cash in the state pool rushed to withdraw $12 billion, or 46 percent, of the money in the fund. On Nov. 29, the state froze the fund to stop all withdrawals.If we don't do something quickly, we're not going to have an investment pool,'' Stipanovich told the board that day.
Until November, the Florida pool was the largest public money market fund in the U.S. It held cash for about 1,000 school districts, towns and local agencies in Florida.
Stipanovich resigned on Dec. 4. He declined to comment.
Florida CFO Sink is riled up about more than Stipanovich. She says JPMorgan Chase & Co. and Lehman Brothers were offloading tainted debt on Florida and other states at a time when those assets were plummeting in value.
The subprime meltdown made front-page news in June, when Bear Stearns Cos. disclosed that two of its hedge funds were collapsing because they were stuffed with subprime collateral. During the next two months, Wall Street firms were quietly peddling mortgage-backed securities to the states.
And the states, eager for higher returns, were buying them.
`It Looks Questionable'
Lehman and the other big players in the market decided they didn't like this stuff in their own accounts,'' Sink says.Where did they drop it and who did they dump it to? It looks questionable to me.''
Florida Got Lehman Help Before Run on School's Funds (Update1) - Bloomberg.com
"But the dynamic here is a real leading indicator, IMHO. Things are bad and getting worse, much worse than most people think. But maybe not quite as bad as folks here think. That's what a leading indicator does."
I agree Rich. I wondered on to this place trying to figure out wtf was going on in housing, and got a point of view that is knowledgeable and substantially different then the msm.
Working backwards from the assumption of a 30% decline in nominal housing prices and thinking about the implications is a different experience from trying to simply extrapolate from where we are today.
ballooning state deficits esp california
California Takes Fiscal-Stress Test - WSJ.com
Hey- do you really think that any one school of economic thought is good for every community? I'm pretty sure one philosophy isn't or one religion isn't. I've been meaning to ask this for a while.
Misean- doesn't the fact that the science of economics deals with value say that at the bottom logic isn't enough? Isn't value a relatively slippery term? The structure of your arguments may be logically consistent, but any axioms are suspect. (Yes, I know you're a champion debater so I'm looking for a serious answer.)
Looks like the regulars (like at a bar) have now ventured away from the topic they all agree on. i.e the housing fiasco.
The later the argument is carried out, the more vociferous.
Surprising, that different political/economic ideologies had a consensus on the housing stuff.
regards all
sbarrkum
Rich: you're right on re: Edwards.
I've been saying for four years that he's perfectly positioned himself for what's coming. Even if he doesn't win this time around, he's young and his message has been consistent for long enough that he can point back to it when TSHTF.
I'm not sure what I think of him as a leader, but I think he'll have to be reckoned with sometime down the road (or sooner if he makes it out of the early primaries and the economy goes south fast).
krugman is a dope. he's turned into a sensationalist political tool.
misean:
Is one example enough to falsify your beliefs? Try this one
The Unofficial Paul Krugman Web Page
Krugman isn't very original in this column, but I enjoyed his style. He argues starting from the findings of economics that the state should not intervene in the rental market.
sdtfs,
Actually no. I'm assuming from your name and posts that yopu are in SD, CA. Well the bubble was big there, but you have to see that the bubble went everywhere. And the bubble was caused by interest rates below the market rate.
If the Rate in SD is higher then Podunk, so what. If both went up that is the issue (and I hate to use the term Podunk).
And no I'm not trying to be a champion debater here, I'm tryibng to let people know that it really doesn't mater where they are...the increase was not rational, and prices are going to fall...
that's about as much help as saying gooonie gooonie goo goo...
Best I have at this hour.
Cheers,
rich-
you mentioned @home in the prior, it actually reminds me more of the worldcom holders and when many were talked into margining their wcom holdings to buy homes as opposed to selling the shares at the peak of the bubble.
we know how that ended.
Yes, sbarkkum, that is interesting, and keeps the lights on after last call.
Misean, Im sure youve noted that most Americans conflate Austrian economics with their conception of hard right wingnuts. What else would one expect of the Limbaugh / Streisand Punch and Judy show that passes for political discourse these days? Whos even heard of Rothbard? Hard to give up a two dimensional continuum of name brand political alliances, harder still to defend the right to be left alone. And as for the confederacy, it takes a lot of scholarship to rinse the Battle Hymn of the Republic version of the war between the states. Winners have written the history and every boy and girl in red state or blue is well and truly inculcated with it.
For what its worth from a distant view, I noted that opposition to the current regime was early on cogently accomplished from the limited government standpoint (Ron Paul) than from the vested left. Democrats (with a majority!) continued fecklessness as an opposition should be a lot more discouraging than it seems to be.
Earlier in thread
There is no law that says that you have to be a minimalist government type to be an economist. Your view of of the opitamilty of limited goverment is just that - a point of view. Plenty of "real" economists agree with government intervention can often be a good thing.
No surprises here. Real economists are too often beholden to who is paying the bills, whether it be endowments, industry associations, mainstream media or what have you. minimalist government types got almost nobody to pay the bills. In my book they may be worth more attention simply due to this fact.
The "Domino Effect", Wall Street CEO variant:
Bear Stearns looking for successor to Jimmy Cayne
Misean,
while I respect and have leaned from a good many of your posts i must disagree with some of your negative pronouncements about J.M. Keynes.
Yest it is true that he grossly underestimated the speed and degree to which Germany rebounded economically after the first world war. He mis-underestimated (ha) savings and production. Keynes was motivated by a belief that a constructive approach (Marshall plan?) rather than a compensatory-punitive approach to the defeat of Germany would pay dividends to all concerned in the future..
Yes, he was wrong in many of his underlying assumptions though one may argue he was far sighted in his policy prescriptions.
Notwithstanding past errors, Keynes major contribution to economic theory is that he understood laissez faire capitalism might not be able to establish an equilibrium point between demand and supply that would result in anything near full employment. In such a case he said government may have to respond to depression by stimulating demand with deficit speading.
As for Paul Krugman he's not right all the time either. BUT, I would suggest to you that extreme forms of capitalism and socialism each offer us a pernicious system, and at least Krugman understands that. There are places and times and ways in which government should intervene and circumstances when the free market system is best left unbridled.
the magic is to know when and how.
Extremism be damned.
I am reading the Friedman's article on Bali in NY Times What Was That All About?
So to now hear these American technocrats present what was a thoughtful analysis that made sense, flies in the face of what we have come to know about this administration, she added.
A lot of this is the price America is paying for the gratuitous way President Bush trashed the Kyoto treaty in 2001, without presenting any alternative for six years. Message to world: Get lost. We only care about ourselves.
So now, when both Mr. Bush and Congress have moved a little, few people believe even that is for real. As Irwandi Yusuf, the governor of Indonesias Aceh Province, bluntly said to me: We dont believe the Americans in this administration.
If we replace "climate" with "financial products" will this be the same reaction for the next few years.
sbarrkum
Peter T,
well that's the whole point...his style.
Further he attacks things with whatever he has available. If Clinton was Moron...err...President, he would be defending him. that's the point. And the point of my reflection on an earlier CR post.
Cheers,
manhattan r.e. softening
SQUARE FEET; Manhattan Market Dips, but Parts Remain Rarefied - NY Times
I didn't agree with his falling dollar assessment either. The US imports a lot more than it exports, as seen by our trade deficit. When the dollar weakens, it costs more to buy foreign goods. A pick up in exports alone will not compensate for the weakening dollar as it constitutes only about 10% of GDP. When you add in higher oil prices, a weakening dollar is most certainly a concern for US interests.
So, speaking to this - he says a 30% price correction in housing. Second we are in a period of "debt correction". Same as 30/31 - which prolonged the stockmarket correction of 29.
Are we seeing banks hording cash to offset unknown paper losses? Yup.
M-, congratulations on keeping your cool in the face of ad hominem attacks.
Surprising, that a logical fellow like you would have voted for Kookcinich.
mock turtle,
Thank you, but I would argue that this is incorrect:
As for Paul Krugman he's not right all the time either. BUT, I would suggest to you that extreme forms of capitalism and socialism each offer us a pernicious system, and at least Krugman understands that."As for Paul Krugman he's not right all the time either. BUT, I would suggest to you that extreme forms of capitalism and socialism each offer us a pernicious system, and at least Krugman understands that."
First Krugman does not off this in his socialist arguments. And Second I would say that free markets allow you to buy what you want. Why is that a bad thing? And I'm willing to allow you to buy ICBM's and Nukes. Just to be REALLY provacative.
Unfortunately I have to get up way early tomorrow...but think about it...why shouldn't you have a 120mm howitzer. Who you gonna use it against? gov't thug's? Blow those bastages into heaven. No problem.
Cheers,
Good night all.
sbarrkum: Looks like the regulars (like at a bar) have now ventured away from the topic they all agree on. i.e the housing fiasco.
The later the argument is carried out, the more vociferous.
Arrrr... whaatt did you sayy? Nazi!
smashes bottle over sbarrkum's head
jg,
Primarily, because Kucinich wanted to end the war...only reason
Cheers,
Misean,
Are you drinking?
"So, speaking to this - he says a 30% price correction in housing. Second we are in a period of "debt correction". Same as 30/31 - which prolonged the stockmarket correction of 29.
Are we seeing banks hording cash to offset unknown paper losses? Yup.
Barley"
Yes, that's the problem. Another Fed orchestrated collapse.
Cheers,
Red Pill,
Come on man. I'm getting hit on all sides. My main battle cruiser is listing. If not a little help bro...at least don't fire a volley.
Cheers,
Sounds reasonable, M-. You must be ecstatic about Dr. Paul.
Thanks, Anon, for the link to the NYT article.
Breaks my heart to see the Vanity Fair set on the precipice, now.
Don't look over the edge, folks, because it is going to be a long, long, long fall.
Misean I also run in the same problem you must. If you're making fun of Demos then your audience thinks your a right wing wack-o... and vise versa... The real problem is both sides are so f&@#ed up its to easy not to pick on them...
Good work tonight....
Krugman sucks. Former Enron adviser. He wants a friggin' cigar for seeing the housing bubble. A lot of us saw the housing bubble.
jg,
Last...gotta be for me.
I like RP's rhetoric But I am not committed to a political solution. I think his campaign is interesting...But RP isn't winning in this environment...and I was a statetist to win.
Cheers,
Calculated Risk article quoted in Krugman's NYTimes article
Predicting the house price fall - Paul Krugman Blog - NYTimes.com
ades,
Thankyou,
I have nothing else to offer but that...but thank you.
Cheers,
When you add in higher oil prices, a weakening dollar is most certainly a concern for US interests.
Only if the rest of the world is able to de-couple from the US consumer.
If the US consumer is really the "consumer of last resort" a weakening dollar will have only a minor impact on US core inflation. The majority of the impact will be in the margins of industries dependent on exports to the US.
Kicker - How much margin do you think exporters to the US have to give? What happens after that?
I agree with misean, and I'm a spittle flecked right wing conservative. Perhaps you all could direct your antipathy towards conservatives towards me, while engaging Misean directly on the issues?
Warmest,
prat
Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent
Um, which state? The Bush Administration?. I don't think so. Former USSR? No way. So just which state does Krugman think is "omniscient and omnipotent"?
A Can't-Do Government
Face it, the reason Krugman gets attacked so much is that he's been right about Bush all along, he's been right about Iraq all along, and he's been right about the housing bubble at least since 2005. That's called reality, and the neocons can't stand it any more than a vampire can stand daylight.
This is really simple stuff: See perdition next to Subprime & SIVs, CDOs, derivatives, hocus pocus, congames, greed...
Price-to-rent ratio. 20% nominal, 30% real. Check! Census data. Check! Flow of Funds. Check!
Gee, if I'm not mistaken, Conjure and I can start building some really neat models for the playbook. Just in time, too! Check!
CR - Today is the first time in as long as I've been reading your blog (long before the disappearance of the hiking photo at the top, and even before Tanta went from commenter to co-blogger) that I've seen the terms "Shrub" and "Clinton BJ" appear.
One of the greatest things about this community is the intelligence of the commenters and the restraint they have shown in letting their political freak flag fly. Maybe the greatest thing.
Hope tomorrow's different. It could be hard to track down Conjure Bag if he moves to some other blog.
MLM- "Hope tomorrow's different. It could be hard to track down Conjure Bag if he moves to some other blog."
Check!
Misean,
Not an attack. I noticed an increasing snarkiness and thought, drinking?
I'm certainly drinking.
"Give me wine to wash me clean of the weatherstains of care." - Ralph Waldo Emerso
Ha ha. Red Pill I mean.
This is a great blog. Bad things are happening and emotions run higher late and/or after some drinking.
Even with the most polar disagreements on this blog, it is encouraging to me that people are giving these issues so much thought. I hope all of you can vote.
I really hope this blog didn't jump the shark tonight. I got nowhere else to go! I got nowhere else to g... I got nothin' else.
Krugman backed away from his stance on rent control in his lengthy NYRB
article "Who was Milton Friedman". Anyone reading that essay would think Krugman was critical of those opposing rent control.
Krugman, the guy who always gets its right? The same guy who earned two published corrections (for outright lies) and a retraction from the NYT's editorial board?
Krugman's greatest fear is that the missing minutes from that Enron board meeting that he was paid $50K to address will suddenly appear.
a lot of people have been drinking heavily since last august
MLM, obviously those terms weren't used by me. I think Krugman does a pretty good job of explaining a number of current issues in this talk. Nothing earth shattering for most reader of this blog - but I think he explains them well.
I was also interested in his currency crisis remarks and his comments on trade induced inflation. Krugman is an expert in the currency area, and his point about the U.S. debt being in the same currency as U.S. assets is good to remember (also a falling dollar helps many companies balance sheets).
On trade induced inflation, Krugman noted that manufacturers in advanced countries (like Europe and Japan) tend to eat the difference rather than raise their prices much in the U.S. But he was concerned about what would happen if China allowed their currency to rise - that might lead to more inflation.
Also his comments on Iran selling oil in Euros (no impact) make sense.
Best Wishes.
I'll concede that Krugman is sage on occasion, but his 'stand-up act' remains weak at best.
I know you 'owe' him one for the shout-outs, CR. But this full-on reach-around wasn't really necessary. Aren't we are better than that?
This gets to one of the key components that make this blog special to me, which I would sort of describe as
1)"beholden to no one", including academia.
2)'bongwater' talk is in play at any time
I just hope Paul hits the tip jar as hard as the rest of the CR faithful.
Jumped the shark? What are you smoking, DESERT DOG?
I'm surprised Krugman has generated so many negative comments. I guess ditto heads read this blog too and are in a funk because Dear Leader has wrecked the country.
Krugman obviously steps on a lot of toes, (he's criticized Obama recently) but for a while, he was the only economist on the left offering a different and sensible point of view. He skillfully debunked supply side economics which drives the WSJ editors nuts. Given the state of politics in this country, his arguments are necessarily as strident as those found on the extreme right end of the spectrum. He's a good counterweight to Kudlow, Glassman, Hasset, and CNBC. He discredited The Maestro and his wacky Ayn Rand followers long before it was in vogue to do so. Like when Sir Allen gave his blessing on tax cuts in early 2001, rather than pay down debt, which destroyed the budget surplus. He has correctly pointed out that the goal of many on the right, like Grover Norquist, who wishes to shrink government small enough to drown in the bathtub, would prefer starve the government solely to destroy the successful social programs. He has also written numerous times about the Social Security 'crises' which isn't, while the current administration is hell bent on scaring the public. But, that's what this administration does best...uses scare tactics.
Based on recent polling, the majority of Americans believe the US is headed in the wrong direction; trickle down economics is not working.
I really hope this blog didn't jump the shark tonight.
Its the internets - it jumps the shark once in a while.
I've been here from very early on - first few months. Snarkiness comes and goes - I mostly ignore it. With the upcoming election it will be harder to ignore. Maybe I'll do more fishing then.
On Keynes & Mise - I think a wise person can learn from both if they don't extrapolate too far from eaches central message.
Keynes had a very simple & short run mechanistic answer to the depression - gov't manipulation of money supply to juice demand - within that constraint 'it worked'. Taken too far (constant on going manipulation) and maybe the cure becomes worse than the disease?
The Austrian answer is not one of 'value' but 'values'... allowing personal economic freedoms even if the choices made from that freedom occasionally leads to ruin.
The irony (I feel) is that if you follow either path dogmatically you end up with the other eventually. Go laissaz faire far enough long enough and eventually a bad cycle puts politicians in place that heavily manipulate. Manipulate heavily long enough and the people cry for 'small gov't and less regulation'. Rinse repeat.
The more rigid the dogma the wider the pendulum swings when the system snaps.
I personally think there is a time & place for moderate manipulation (monetary & fiscal) and reasonable regulation. But there is also a place for economic freedom. The question is how much of either when and where.
It would be good idea for the Austrians & Keynesians to listen to each others actual beliefs and not just debate the straw men or attack the personalities.
Maybe I'll do more fishing then.
This strikes me as sage advice. I like fishing. I'll keep that in mind.
Keynes and Marx are the ONLY two economists who came close to getting it right about "capitalism" and all the contrarian BS penned above is just that. BS. They make Milton Friedman look like the vicious, tiny-minded econo-fascist that he was.
The thing Conjure and I love the most about Americans is their limitless capacity to stir shit.
Something good sometimes floats to the top.
My deep insight is to think of economics in terms of fire.
The communist sees a harmless fire in the fireplace, and throws a bucket of water to snuff it out. Fire is dangerous after all, and has killed many men and women.
The libertarian/misean/randian sees a harmless fire in the fireplace, and throws a bucket of kerosene to make it grow much larger. Fire is good after all, and helps us in many ways.
The normal person recognizes that fire can be both and bad, and that it needs to be controlled but not stifled.
Something good sometimes floats to the top.
But you wouldn't want to spend weeks on end swimming in it.
MLM- "But you wouldn't want to spend weeks on end swimming in it."
Absolutely not.
The communist sees a harmless fire in the fireplace, and throws a bucket of water to snuff it out. Fire is dangerous after all, and has killed many men and women.
The libertarian/misean/randian sees a harmless fire in the fireplace, and throws a bucket of kerosene to make it grow much larger. Fire is good after all, and helps us in many ways
I am so stealing that.
I'm shocked and awed that so many people are ignoring the most important part of the speech.
Colostomy bags!
And the number of people who really, really hate Krugman is pretty impressive. He didn't even talk politics and only said what most people on this board already know and he's getting the hate.
daveNYC- "And the number of people who really, really hate Krugman is pretty impressive."
If this forum is any indication, you either love him or you hate him.
Colostomy bags?
With that, we wish all a good night. Conjure wants to watch Scrooge McDuck 'documentaries.
Um, perhaps some more detail on the link. It's not a picture. It's a post of the memo that Krugman mentioned at the beginning of the speech.
What, you think I'd try and goatse you guys?
I would say the Krugman dissers are not the Krugman readers, --not even to the extent that they acknowledge PK referencing this site as one of the best on housing. [They'll show him. They will.)
In the industry, it pretty much goes without a thought that the economists will be "rightwing"...they are being paid to represent company interests. Duh.
In the government, it is no different --in the WH, (the Treasury) and not much different in the FED...and how many "lefty" lobbyists do you think are operating with Congressmen and Senators? There are reasons why wages are going nowhere people.
It is a lonely place to be a "leftwing" economist with access to media. And so how "leftwing" is Krugman"?
Nothing compared to Chomsky.
to make this go faster : Interst rates need to rise.
so why is Krugman supportive of what BB is doing ?
There is NOTHING people hate more than having someone else be right regarding something which they were wrong about.
You'd think they might be grateful, but it never seems to work that way.
Kicker - There has never been an economy in the history of the world that has a constant devaluing currency and continues to have economic prosperity. We are a net importer and that puts us at risk. I think it would be very naive to think that a weak currency could somehow help or be good for the US. Its in the worlds economies interest to have countries that spend, and don't save, to have a stronger currency than countries that do save.
The comment section of this blog is full of very smart people who think they are much smarter than they are.
just an observation...
Would like to see more humility and tolerance.
Misean:
Well, to tell the truth, I'm starting to think Marx was right.
The comment section of this blog is full of very smart people who think they are much smarter than they are.
just an observation...
Would like to see more humility and tolerance.
Missed Information | 12.19.07 - 10:09 am | #
After you.
I really don't understand the Krugman hate at all. Unless you are a die-hard partisan Republican or a hard-right Libertarian/Austrian/anti-statist I can't imagine the grounds for complaint. Please show me a pundit with a better record than Krugman. I have seen no criticism at all of Krugman in this thread that holds any water etc, particularly that coming from mini-Mises. "Krugman believes in an omnipotent state." ????
tranches of love, that was beyond brilliant ('course as a left-libertarian it aligns with my thinking perfectly)
(BTW, threaded posts would work much better)
miscreant
a) how many Central and South American, and Asian, dictators simply allowed business to come in and run the country, aided and abetted by the government ? one of the closest things to laissez-faire we've seen. So, did Friedman support these dictatorships ?
of course not - they used his ideas to devious ends. Same thing happened to Keynes, Marx, and many mnay others.
b) economics can NOT be based on logic (in the only "sense" that makes sense, namely mathematical) since it always refer to human behaviour, which is certainly not logical. Oh, economists claim to base their ideas on "logic", whcih is really their assumptions about how people behave under various cicurmstances, and how it comes otgether as a whole. They are rough MODELS of human behaviours applied to the economy, as all generalized models of behaviour are necessarily rough.
One can apply mathematics to these MODELS to allow calculations, predictions, etc, but these models are in no way based on mathematical logic.
that is obvious enough. and BTW, economists like Keynes and Galbraith and others recognized this -JKG has a great quote on economists and their models that I'll try to find.
so, again, anyone who believes that their 'economics' is based on mathematical logic is fooling him/herself, and everyone else. their is nothing ad-hominem about that - it's simply logical
Anyone who posts things to the effect of, "you are a fascist, cheers", should be rigorously ignored.
That sort of slap in the face with an arrogant smirk is a clear indicator that nothing useful can come from conversation because the person who does it is primarily interested in making you angry.
Mini-Mises: "Yes, Krugman has a Ph.D. from MIT in economics, but his writings, both popular and academic, demonstrate that he does not believe in laws of economics. Instead, like most folks with socialist leanings, he believes that the state is both omniscient and omnipotent and simply by fiat can eliminate those pesky little problems caused by scarcity."
The above paragraph appears to have been written by an 18 year old who has just read Atlas Shrugged for the first time.... it displays not even the most rudimentary understanding of the issues of economics and public policy.
Only someone with very limited exposure to economics would speak of the imaginary "laws of economics". I have a terminal Master's in Economics from one of the best universities in Canada and I've never heard of these "laws". (Economics deals in models, not "laws").
If you are going to post stuff from Paul Krugman, then you should post stuff from people who are on the other end of the political spectrum.
I only listen to people like Krugman if I don't completely understand the extreme Democratic/Liberal position. I don't think that Krugman belongs here.
In his Google talk, Krugman disavows policy solutions to the current crises.
He says, in short, let housing wash out. Let investors go bust, banks go down. We'll see who has solvency later and go on from there.
I disagree with none of that (and I agree with CR that Krugman is an admirable populizer of a difficult topic). But where I find him tepid -- indeed, Clintonian-centrist tepid -- is that he only sees a regulatory revival if the whole system goes down the tubes. "I'm not sure," says the terror of the Times, "we're ready to admit the market isn't sometimes right."
Some socialist.