Confused, Krugman is certainly deserving of the award, but I agree that the Nobel committee, in recognizing one of the most vocal critics of the Bush administration, has made it clear the utter contempt the rest of the world holds for Bush and his cronies.
Paul Krugman has more then earned this award for his contributions to economic theory. Its precisely his technical prowess that gives him the level of credibility he enjoys. He is a "real economist." The mass market books and op-ed columns are just part of his story.
His contributions to international trade theory and economic geography transformed the topic.
I've been looking for this award for several years.
Krugman warned in 2001 and 2002 about the possibly disastrous consequences of letting Bush administration run amok. He pointed out evidence that Bush and his cronies are both incompetent and corrupt.
It turned out he was right. And the people who stayed silent in 2001/2002 and allowed Bush to ram through his policies now are partly responsible for what has been done to America.
And this means that Krugman should not have won the Nobel. Because he was dead on about Bush and his impact on America's future.
Not political. Bush was dead wrong on global warming and sat on his hands as the US financial system melted down. It's not politics, it's a matter of who has been proven to be right
Intelligent and socially responsible people only seem to make it into powerful public positions by accident.
Even intelligent and socially deviant people don't seek public offices, as they would prefer to rule via proxy as to have at least one layer between themselves and the guillotine.
Only boobs take these jobs. Even our illustrious Paulson is just a puppet in a bigger sadder tragedy.
The Nobel committee chose Krugman? After choosing Gore? And you think that's political?
Part of the problem in our thinking is that we tend to see issues of (factual) right and wrong in political terms, because we settle issues of public policy through politics. As Anonymous 10.13 notes, though, Krugman has been (factually) right. The Nobel folk do attach a barb to their choices, but not just aimed at the US. They've aimed their barb at the financial industry (Grameen) and the bloodier participants in the Northern Ireland struggle, to mention a just a couple. Gore, too, was on the (factually) right side of an important issue.
Krugman offered the Nobel guys the opportunity to use him to make a point by deserving the Prize. I'm surprised that they chose economic geography (though I suspect Krugman won't be) because I thought they had a love affair going with finance and would cite his extension of whatsisname's FX theory (that funny German fellow who died too young - never can think of his name) thereby honoring two birds with one prize.
Back to politics, though. Krugman is a gadfly, a man who insists on speaking the truth no matter who is annoyed. The result is that powerful people work to confuse the public about who is telling the truth - nothing new there - by sending out a small army of liars to whittle away at his message. Politics inspires his attackers, but it is unfair to see what Krugman does as primarily political. Politics have been thrust upon him because he wants to tell us what is really going on.
Krugman is considered too political because he was right too soon. When Bush was running he said that Bush's numbers couldn't possibly add up and weren't honest. People weren't ready to hear that, so he earned the nickname "the shrill one"
(from "I used to like him when he wrote about economics, but now he's so shrill").
But perhaps the time to have contempt for people who are right too soon has passed. Let's ask CR and Roubini.
In the big picture, we have waves of crisis coming over the next several years. At least 3 that I can see.
We are expereiencing the first wave now which is the financial crisis. And our current financial crisis has 3 or 4 swells within the wave.
IMO we are only in the first swell which was the subprime implosion. Next swell is the Alt-A implosion and the swell after that is all other debts (credit cards, auto, school, LBO, corporate, muni's) along with the accompanying layoffs and reduction in incomes.
The world's debt is going bad and it is just starting, again, IMO.
So kicking the can down the road is all they have....not sure how far it can be kicked though.
You'd like to believe that Krugman's selection was based on his academic work and not his New York Times writing but when frauds like Al Gore and Rigaberto Menchu win Nobel Prizes one isn't easily convinced.
Will he be the first Sec of Treasury to have won a Nobel Prize in Economics?
Krugman will never be Sec of Treasury. He hates administrative positions; he does not even want to be Department Chair. He has said several times on his blog that he is not interested in a position in the next administration.
You'd like to believe that Krugman's selection was based on his academic work and not his New York Times writing but when frauds like Al Gore and Rigaberto Menchu win Nobel Prizes one isn't easily convinced.
The economics prize is separate from the prizes for literature, peace, etc. as has been kept less political for the most part.
There's no doubt that Krugman deserves this award, whether people agree with his politics or not.
This one paragraph, from The Great Unravelling, was good enought to win him the Nobel -- of course, the Swedes had to rummage around for a respectable, 'professional', 'economics' reason:
... It seems clear to me that one should regard America's right-wing movement -- which now in effect controls the administration, both houses of Congress, much of the judiciary, and a good slice of the media -- as a revolutionary power in Kissinger's sense. That is, it is a movement whose leaders do not accept the legitimacy of our current political system. [pp. 5-6]
Written in 2003....
Usually right-too-soon is worse than wrong-with-everyone-else. This appears to be an honorable exception.
Krugman may also have the award for the most published corrections required of a NYT's op-ed columnist. It would be funny if the missing minutes of that Enron Board meeting Krugman addressed did finally turn up after the award was handed over.
I think he would could make a great Sec. of Tresury.
I would certainly hope he cleaned house in the treasury dept. ridding it of the massive conflict of interest types. 4 GS execs in chanrge of the 'cash for trash' program.
They are not even trying to make it look like they are avoiding conflict of interest.
At any rate, conrgats to Krugman and I hope he has some place in the next administration.
Funny image of Princeton Power!
I'm also beginning to think the bond market is going to get crushed. Someone mentioned it around here a few weeks ago and I didnt think much of it at the time. I'm a believer.
I also think some of those mortgages that will reset in 09 and later will be ok. I think that the borrowers will be helped.
I also think that consumer spending might get curtailed say 20%. (Totally made up that number.) Still that will wreak havoc on earnings etc...
Too bad the committee is diminishing the prestige of the Nobel prize. Gore and now Krugman.
I wonder if Krugman can postulate on the impact of a significant global cooling trend just as we have spent significant material and political resources on the wrong problem. When people experience economic issues they get restless. When people don't have food they can get real ugly.
Krugman said when he took up the NYT job that he was doing it because it put strict limits on his popular writing, thereby giving him time to get back to serious research. Ah, well. Now he's stuck for a year making speeches.
He won't be Treasury Secretary because that requires him to repeat an agree-upon set of points, even if those points are untrue. The Committee had plenty of time to name Krugman, and plenty of older economists in line who are more deserving. He was chosen now because he is a gadfly. Even if he were a normal mortal, he'd realize the glaring irony of taking a job that requires him to speak power to truth after winning the Gadfly Prize.
I also think some of those mortgages that will reset in 09 and later will be ok. I think that the borrowers will be helped.
Let's hope so. It definitely creates a political fiasco, though. The government does not have the resources to help them all. And how do you tell one person that they will be helped and another that they won't?
While I'd like to believe that the award of this medal was entirely for economics work, I suspect that a small amount of it has to do with the situation we are currently in, and his continued criticism of how we arrived here.
Prof Krugman's bully pulpit just gained more validity and (deserved) attention.
I guess this cements Obama's Treasury Secretary pick. Krugman has been running for office for the last 6 months. He stopped valuing the truth as much recently to suit his aims.
I know that they've been trading disjoint from the rest of the financials for quite some time, and while I would not have expected a material rally today for JPM (since the market unlike me has not been expecting them to need help, and seems to have been fine with the LEH CDS auction last week), why a 3.6% sell off in this market?
Libor no longer represents interbank lending rate.. it represents where corporates borrow from banks.. banks can borrow cheaper from the Fed, so what does Libor now represent?
Libor is more of an asset now than a liability... any thoughts or comments?
Most likely the action in the financial stocks can be attributed to allowing the Treasury the lowest possible price for the preferred equity it will be buying.
Once the price is set....yet another bottom call will be made.
I wonder what Mitsubishi was given so that they can stomach a 35% loss on it's "investment".
Hold and Hope....good for large banks as well as PCA.
Re: Krugman as Sec Tres. What did Johnson say?: "I would rather have him in the tent pissing out, than outside the tent pissing in"?
Krugman will stay outside the tent, unless a gun is held to his head, and will be pissing off the Obama administration to no end.
I hope. I hope. I hope.
Libor is more of an asset now than a liability... any thoughts or comments?
Only that we should never, ever again have a thousand-comment thread where we mangle these terms. LIBOR is a statistic, which tracks an expense. It is neither an asset nor a liability.
I wonder if this will spur the protests of former winners like the friedman selection did? The protest was huge with the Friedman selection, and history has confirmed there protests were warranted, as imaginary and superstition based Friedman policies have gotten us into this mess.
I'm not sure which to savor more, the well earned award for my favorite economist (sorry CR you're a close second) or the schadenfreude from watching hundreds of bitter neocon heads explode!
The reality based community wins one. And Mr.T eats his own poo.
The Nobel committee chose Krugman? After choosing Gore? And you think that's political?
FYI to the folks that keep comparing Kissinger, Gore, etc.
There is a huge difference between how the Peace prize is chosen and how the Economic prize is chosen. (And both are separate from something like physics.)
Gore & Kissinger won the Peace prize, not economics.
You win awards predicting Bush economics would fail?
Here is my prediction, they are going to do everything possible to kick this can down the road till the election is over and then run for the hills!
Yeah, because you know, like, there aren't any real people on the other side of those positions, and like, you know, no one ever has to post margin on an exchange traded option.
No, Krugman won the Nobel Prize for repeating the conventional liberal wisdom from a prominent column in The New York Times. It's as if he won the Nobel Prize for Hating Bush.
You don't think was it for Krugman's previous work as an advisor to Enron, do you?
Nevertheless, congratulations are in order for the man who endorsed Paulson's TARP plan with the incisive phrase, "Yuk. Phooey. I guess so."
Gore, a fraud? Wasn't he right about global warming?
no way. that's why we have all these extra icebergs popping up all over the place.
I do find it interesting that people equate Gore's Nobel with Krugman's Nobel. They have little to do with one another.
another thought for those of you who have exploding heads today:
The Nobel process is INTERNATIONAL. thus, they don't see things through the Amerocentric liberal-conservative way. Only Americans have been brainwashed into thinking that one must belong to one of two supergroups. Instead, the other countries in general have many parties that have different ideologies.
thus, for them "liberal vs conservative" doesn't mean as much as it does here.
from an international perspective there is no doubt that global warming exists (at this point I'm not saying they're right, I'm saying that's what is believed internationally). thus, all the major western countries save one (the US) signs the Kyoto Treaty. the US is left out. Thus, it is no surprise why Gore won the Nobel. Not to piss on GWB, but because it's in keeping with Western principles (excluding the US).
Likewise, Krugman's writings are in keeping with INTERNATIONAL thought. Sure, GWB et al are on the outside of this. but this is what happens when you say things like "deficits don't matter" or when you go to the UN and tell them that they don't matter just before you attack a sovereign nation.
so my thought is NOT that these prizes are given to "liberal" people. They are given to people who espouse positions that are equivalent to INTERNATIONAL positions. In general, the American libs are more in keeping with international Western ideologies. (for better or worse).
Confused wrote:
I'm happy that he won it, but concerned that the Nobel committees seem to be becoming particularly political in their choices!
what... a notion that one can separate economics from politics
the central questionn of economics..what goods and services shall be produced, how those goods and services are to be produced, and whom gets what portion of that production
what , how, and for whom...sounds like politics to me
Krugman is an economist with a soul and and he is a genius who can explain his ideas to morons like me.
I do find it interesting that people equate Gore's Nobel with Krugman's Nobel. They have little to do with one another.
That comparison began in response to someone who claimed "Bush haters" were preferred by the Nobel cmmte. The comparison was made to show facts and reality are in play not bashing Bush.
The Nobel process is INTERNATIONAL. thus, they don't see things through the Amerocentric liberal-conservative way. Only Americans have been brainwashed into thinking that one must belong to one of two supergroups.
to further elaborate this:
why in America must "global warming" be a liberal idea?
Can a pro-free market business person not believe in global warming? why not?
see, it doesn't make sense. Global warming has nothing to do with believing in free markets. Yet for some reason in America most people who believe in free markets are FORCED to believe that global warming doesn't exist.
take me: there is no party for me. I am very fiscally conservative, but very socially liberal. I believe in pro-business principles, but I do NOT believe in unfettered unregulated "free markets" (since that's partly what got us here... hello OTC CDS market).
In other countries I could belong to a political party with others that agree with my viewpoints (socially liberal fiscally conservative) but in the US I have to choose socially conservative fiscally conservative OR socially liberal fiscally liberal.
That said, the last 8 years the republicans have become socially conservative fiscally irresponsible, thus they have nothing for me.
I haven't read Krugman's paper(s) that won him the Nobel Prize and hence have no opinion on the matter.
I will say, Krugman was a wishy washy on the housing bubble. He was a bear, but he always hedged himself in the interviews I saw.
Most of the folks on this board had way more conviction than Krugman with regards to the eCONomy. Krugman's strongest convictions were political and NOT economic.
Krugman is a Keynesian. He believes central bankers can interfere successfully in the capitalist economy. He trusts central bankers. He believes war and public projects can help the economy. He thinks 'The New Deal' ended the depression. I wonder why it lasted 10 years?
We are on the titanic IMO....and we are clapping at some guy who won a round in one of the first class cigar room poker games aboard the ship.
Mr. T. | 10.13.08 - 10:39 am
we're clapping for a guy who tried to call attention to the iceberg
OT: Berkeley's Brad DeLong would be great but he is a bit young. I prefer Stiglitz because of his rhetorical ability. (Either way, the wingnuts would go completely postal.)
Your insistence that we all view the Nobel choice through your lens is a little embarassing to watch. The presumption that it is "information" (in the FYI sense) to the rest of us that Gore won a different prize than Krugman is kinda silly. You know no more about the selection process for Krugman's prize than is available in the press, unless you are part of the process. If others look at the same information and come to different conclusions, there is room for disagreement, but no room for you to "correct" the rest of us. You simply don't know enough to correct anybody. Yunus won the Peace prize for creating a new banking system. Why? It was more closely associated with economics and finance (finance has been a dominant them in research honored by the Committee) than war and peace. There are some seriously bad instances of widespread violence and efforts to quell them going on around us. So why the Peace prize for an economist who set up a financial system? One reason is that Yunus wasn't being honored for theory, and it is theoretical (and mathematical) contibutions that the Economics Prize is meant to honor. So the Committee just decided that a banking innovation which contributes to the welfare of the poor leads to peace. All done. Arguing that we must look only at the formal categories and the formal process for handing out prizes is kinda small minded.
An FYI on that Kissinger Nobel... "Lê Ðức Thọ and Henry Kissinger were jointly awarded the 1973 Nobel Peace Prize for their efforts in negotiating the Paris Peace Accords."
Le Duc Tho had the good sense to turn down the Nobel, on the grounds that 'there is still no peace" in his country, Vietnam.
"Vulgar Keynesian Paul Krugman of the NY Times and Princeton has been awarded the 'Nobel' prize in economics, as Bill Anderson notes. Unlike all the real Nobel prizes, which were established and funded by Alfred Nobel, the economics prize was established and funded by the Swedish central banks. With the sole and shining exception of F.A Hayek, who was forced to share his prize with a Swedish communist, every other Nobel econ winner has been a shill for central banking. This year especially, the central bankers wanted a loyal propagandist for endless currency depreciation."
"Krugman will never be Sec of Treasury. He hates administrative positions; he does not even want to be Department Chair. He has said several times on his blog that he is not interested in a position in the next administration.
Walker "
I agree. But not because he said so. He only said so because he has aligned himself to the Clintons and has unprofessionally attacked Obama on many occasions showing he is too political to be taken seriously.
Sorry, Krugman, but Obama WOULDN'T hire you. You shot yourself in the foot. Enjoy your footnote (Nobel's econ awards are footnotes, get over it), your glory days are over.
You know no more about the selection process for Krugman's prize than is available in the press, unless you are part of the process.
Your either/or is incorrect, I have never been directly involved, unless you consider conversations with those who are choose as involvement.
So I say again: The process by which the Peace prize recipient is chosen and the Economics prize is chosen is vastly different. Though the process for peace/economics/physics looks positively close compared to literature.
mock:
I agree with you. There is little argument from most knowledgeable parties (it would seem) that there is in fact climate change that is occurring.
The argument is moreso how much of this is attributed to the actions of man.
as with all things, the cause/effect are likely multifactorial and interrelated.
I highly doubt that dumping tons of Carbon into our atmosphere is helping the matter, even if it isn't the full "cause".
I'm just saying that I find it humorous that Americans find this "need" to polarize into left and right. And then people are forced to choose right or left especially when the various arguments have nothing to do with right or left.
this is opposed to Europe IMO where you can choose a spectrum. (like middle left or far left, or you can have socially left fiscally right and so on)
Americans thus take the decisions of an INTERNATIONAL body and try to distill American values into it.
it just doesn't work
so I brought my own theory: that the International Nobel committee chooses people who are aligned with international ideals, whether or not those ideals are "right" or not is immaterial.
and the "politics" that the American-right cry about is likely not quite how it works.
in other words:
if you choose to be a "Maverick" and go against the grain, don't be surprised to not win awards from the group you're Mavericking against.
Just like I don't rate well on Mish's blog... because I don't believe that "truly free markets" are possible, (great utopian ideal), I don't believe that the "free market" always is right, I don't believe that Gold is the "only true and honest currency" possible, and so on.
I just don't see any cutting edge economics on his part and this award represents the lack of depth in economics. As usual politics wins out.
Re: The Nobel citation said Krugman's approach is based on the premise that many goods and services can be produced at less cost in long series, a concept known as economies of scale. His research showed the effects of that on trade patterns and on the location of economic activity.
In contrast to his treatment of U.S. financial officials, Krugman has praised leaders in Britain for their response to the global financial crisis.
In an Oct. 13 column in the New York Times, Krugman wrote that British Prime Minister Gordon Brown and Chancellor Alistair Darling "defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up."
Whereas U.S. Treasury Secretary Henry Paulson rejected a "sort of temporary part-nationalization" involving governments giving financial institutions more money in return for a share of ownership, the British government "went straight to the heart of the problem ... with stunning speed."
Krugman said the major European economies have "in effect declared themselves ready to follow Britain's lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts."
"And whaddya know," Krugman continued, "Mr. Paulson -- after arguably wasting several precious weeks -- has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities."
that's the price you pay for being a debtor nation. China had the Mutal Assured Destruction card.
we back their claims, or they repatriate all of our dollars and/or stop buying more of our debt.
we are both their slaves and their masters.
Well excuuuse me, the US does not only owe china, that 10T goes to the majority of the world.
And you reckless spenders and warmongers better make good your promise to pay. Otherwise you'll have to lose your worldwide dominance as germany has said.
So why the Peace prize for an economist who set up a financial system? One reason is that Yunus wasn't being honored for theory, and it is theoretical (and mathematical) contibutions that the Economics Prize is meant to honor. So the Committee just decided that a banking innovation which contributes to the welfare of the poor leads to peace. All done.
Krugman will never be Sec of Treasury. He hates administrative positions; he does not even want to be Department Chair. He has said several times on his blog that he is not interested in a position in the next administration.
Don't you believe him. He's had political positions in the past, and almost any economist interested in finance would kill to be SecTreas now. Also a disinterest in petty academic politics has little to do with a disinterest in redesigning the international financial system.
Good lord, doesn't anyone ever get this right? I like Paul a lot, and he deserves the recognition, but this IS NOT A NOBEL PRIZE.
You are correct that Alfred Nobel did not set up this prize, but the Nobel foundation has adopted it, which is why you will see it listed under "Nobel Prize Announcements 2008" by the foundation:
I've been reading his pieces in the NYT since he started. He is the reason I became interested in socioeconomic research and the effects and outcomes of economic hardship on families. Someday I'll be a policy wonk and it will be all Paul's fault >; )
Mish and Roubini are certainly not out of the running in future years. I can see some great publishing to come from these two (not that their current bodies of work are lacking).
now which one of us is the parasite, and which the host?
I do not know but if they were buying our paper with their paper to keeep the price of their paper low so we would buy their stuff and bring their country out of third world, what happens if we cannot afford to buy their stuff?
Mish and Roubini are certainly not out of the running in future years,/i>
Mish is out of the running. in fact he was never in the running.
He is too much a devotee of the anything goes Free Market system as well as a massive gold-bug. Plus he doesn't have the academic credentials. (he's very smart though)
roubini would be a possibility, however there is a chance he'll be blamed for the mess if it gets too out of hand...
I'm not gonna beat a dead horse, but Krugman has never been cutting edge and to suggest he stands out as being the finest economist is just another reason to keep your children out of the field of economics, as economic theory is equal to a degree in Polysci and Philosophy, and there is no way in hell anyone will make a living doing what these people do!
FYI, here is some great work, which will be remembered for all time, as this was so important to economics:
Or to use a somewhat different metaphor: in many cases, aspects of natural geography are
able to matter so much not because natural features of the landscape are that crucial, but because
they establish seeds around which self-reinforcing agglomerations crystallize. So it is precisely
the aspects of the economy that in principle allow history-dependent, multiple equilibria stories
to be told that in practice give exogenous geography such a strong role.
Boring, simple and meaningless and a step away from home economics theory!
Congraulations, Dr. Krugman. You sparked my interest in economics when a co-worker gave me a copy of The Great Unraveling. You made a complicated subject interesting and entertaining. I know that you won your award for your academic work, but I think your ability to make a subject understandable to the "rest of us" is invaluable at a time like this. Thank you.
OOPS! This Nobel comes at a bad time for me, when I just made some mildly unflattering comments about Krugman on the Economists View blogsite. I guess I won't blog there for a few weeks.
I was comparing Krugman unfavorably with Roubini, with respect to their forecasts about the Economic Trainwreck. I still think I'm right, but I will not criticize The Laureated One, at least for a while.
krugman is a political hack and the only reason he was "correct" is because he criticizes republicans because the president is one. this is easily as much caused by barney frank and chris dodd, as well as the federal reserve. its not like he is ron paul, jim rogers, peter schiff who have been warning about this stuff for years and not because of partisan politics but because they udnerstood the fundamental issue of the US economy.
resting this problem just on bush (who is terrible) ignores the magnitude of the fundamental issues that caused this and is just as wrong as saying bush had nothing to do with it. the two parties are corrupt. and the nobel prize is a joke. this stuff just gets more sickening everyday.
kharris:...his extension of whatsisname's FX theory (that funny German fellow who died too young - never can think of his name)
Dolde ("new" theory of information asymetries in derivatives use, i.e. arbitrage)?
or Marx or Engel ("new" theory of global urbanization)?
I'm not impressed either, Imnotimpressed. Then again, I pretty sure economics is politics, and the prevailing wisdom today is free trade of capital, damn the (systemic) consequences. Sadly, the Nobel committee had already awarded this year's literature prize to someone else.
Which of Krugman's 200 articles and 20 books prescribed federal regulation of finance industry?
Yes, Krugman is partisan hack, but that doesn't diminish the fact that's he, and many others, have seen the housing bubble from way far away, and the fact that's he's a very good economist.
If you want to see what all the fuss is about Krugman, read "Age of Diminished Expectations". Some people have bashed it for being "wrong", but as the current crisis is proving, he may have been just "early".
That being said, I deplore his partisanship, but appreciate his economics.
Nevertheless, congratulations are in order for the man who endorsed Paulson's TARP plan with the incisive phrase, "Yuk. Phooey. I guess so."
El Cliffo | Homepage | 10.13.08 - 10:37 am
Perfect.
I started reading the NYT every morning from 1985 to about 1998. Every single day. Apart the deterioration of news content over all (not to mention regular Friedman and Dowd), Krugman's vascillations during his tenure finally tripped my last nerve.
The first 100 days are going to be scary for me anyway. Recent float on Treasury and FRB nominees has not inspired confidence in "change we need." Sorry. Finance capitalism with choice of lipsticks is here to stay.
First, much like CR, he generally uses a strong real-data driven argument and explains how he analyzed it. You may not like his views, but it is hard to argue he is wrong on the basis of his basic facts or is obscuring his analysis.
He also has that rare gift of being able to simply and clearly explain what is going on. This is not easy, to paraphrase Mark Twain when writing a letter to a friend, "I apologize for having to write you a long note, I didn't have the time to write a short one."
Economically he gets constant positive reviews by the only audience that counts, other serious economists (and more importantly, their citation references). As I understand it, he also specializes in important and understudied areas like currency crisis, trade balance and exchange rates. (His papers also generally make my eyes water, and this is after my surviving more calculus and engineering courses than I'd like to think about.) If nothing else he deserves props for intellectual output, energy and endurance. Just writing a column like that for a major newspaper (not to mention actively blogging) would be enough to wipe most people out. And, politics aside (although they most likely played a role and sweetened the deal for the Swedes), Krugman had to at least be a gold medal insightful, serious and current economist to be even considered for this prize.
Finally, as noted above, he painted a huge target on himself in the post 9/11 era by daring to be publicly unpopular and doing so in many funny and insightful ways. Much the same could be said of William F. Buckley on the conservative side in the 60's and 70's. Whatever you think of his views and politics, that took guts and more than a little personal risk. I see Krugman as a continuation of a fine tradition of American Curmudgeon-ism (that includes the likes of Buckley, Mark Twain and Will Rogers) which has the temerity to speak gawd-awful hurtful, but necessary, things to that touchy and peevish giant that is popular public opinion.
Congratulations Prof. Krugman, Molly Ivins would have been proud.
All Nobel Prize winners are shills for the central Bank. The only Exception was FA Hayek. He was less militant in his libertarianism than his other Austrian School compatriots like Mises and Rothbard. If you are not, then you will not get the So called "Nobel Prize" awarded by the central Bank of Sweden. This is not awarded by The Alfred Nobel foundation.
I guess this cements Obama's Treasury Secretary pick. Krugman has been running for office for the last 6 months. He stopped valuing the truth as much recently to suit his aims.
Eastside | 10.13.08 - 10:14 am |
May I point out that Krugman was late to the Obama party. He was a Hilbot til she dropped out. I think he's come around now, though.
He'll serve if he's asked often enough. We sure do need him.
I like Krugman but I'm an economics neophyte. As I understand this world there are 3 major schools of thought on the subject:
Chicago School - Let the free market rule
Keynesians - Governments need to rule through control of money
Miseans - Old school hard money advocates, gold bugs, etc.
This site seems to reflect more of a battle between the Keynssians and Miseans. Bush and the Chicagoans, Greenspan et. al. being discredited these days.
Feel free to correct me if I'm wrong in my over simplifications. But where is Krugman. I presume he is still a Keynesian at heart. But aren't we all Keynesians now (as Tricky Dick said many years ago he was). This weekend seems to be if not a final culmination of this certainly a capitulation of sorts.
I think Krugman is an enlightenned Keynesian. But I also side with Miseans. Are we now in an era of battle between these forces. I may be wrong in writing the free market Chicagoans off so soon however. Facinating times.
Actually, the Austrian School economists (such as Mises) are very libertarian, and usually like free markets.
Another group of economists that are worth reading are the Supply-side economists, who have some good ideas but love to pig out on cutting government spending.
I've studied under profs from all the schools you've mentioned, and all of them have some good ideas but none of them have all the answers.
Most Republicans are Chicagoans except liberetarians like Ron Paul, Bob Barr and a few others that I'd call Miseans
Most Democrats are Keynesians but the party has been coopted by free marketeers. Clinton(s) fall in this category and maybe Obama (we'll find out). I don't think there are any Democrat Miseans.
CR is a reformed Chicagoan perhaps. Mostly I think he likes a good bar fight and we sure got one right now.
With your moniker are you then a Smithian or is it in jest? I always joke Adam's invisible hand is just piking our pockets.
Supply siders love the "trickle down" rational. Did that really work. Hardly. The lions share went to the top 1%. Let the rest eat crumbs.
I would agree that the Austrian Miseans advocate free markets but object to the cronyism of our current variation. Unfortunately the Miseans are a tough love bunch that won't win many friends. I understand this but would vote for Ron Paul just to be contrarian. But if he really did get elected and forced this change it might be too scary.
So less scary and definately warm and fuzzy are the Keynesians. But all roads may (will) lead to ruin anyways. I think those that undertsand this prefer warm and fuzzy ruin. At least that's what I read into the goings on this weekend.
Gary writes: "I'm not sure which to savor more, the well earned award for my favorite economist (sorry CR you're a close second) or the schadenfreude from watching hundreds of bitter neocon heads explode!"
Gary is assuming that "neocons" consider the Nobel prize something of value. It has been devalued by the political bias of the committee for some years now. "Neocons" expect Nobel prizes to go to liberals in any field where politics possibly has influence, which certainly includes economics. The surprise would be if a conservative won one - then our heads might explode because we might have to consider that the prize committee isn't just playing politics. This is no surprise at all. The Nobel prize has become like the Sundance film festival, or Cannes, or the Oscars - just another forum for liberals to praise themselves.
So, sorry Gary, no heads are exploding. Just shaking sadly at what liberals have done - and will be doing - to once-respected institutions.
blackocktober, I think the "Miseans" (from what I understand of Misean's views - Sorry Misean if I get it wrong) are better framed in economic terms as being in the "Austrian" school. Austrian economists are the more old school "strict constructionalists" of the economics world. As such, they have a lot of appeal with the goldbug/anti-fiat currency types.
That being said, there are less strict Austrians (i.e, in favor of fiat currency and stimulus packages, just that they should not inflate if possible and are paid for) and less liberal Keynesians (i.e., in favor of balancing budgets, re-privatizing banks and paying down debt once the recession/crisis is over and the economy righted).
I also think all major schools of economic thought have more than a point or two in their favor and that you'd be a fool to give over the economic tiller of a major economy to just a single economic viewpoint. The point is to be pragmatic and get the economy working in the fairest and most balanced manner for the most people. This is probably why Krugman gets labeled as an enlightened Keynesian, he's generally pragmatic and looks for fairness.
(--Warning, bad analogy--) In my view, as with the differing schools of marital arts and self-defense, in the end the point isn't who's the most orthodox in their form, it's defending yourself against the guy trying to wipe the floor with you in some unpleasant manner. You should also look to try to come out of the encounter in as much of one piece as possible.
In the middle of a fight is not the time to be arguing over ideology, the only questions should be effectiveness and, for economics/public policy, overall openness and fairness (the society coming out of the fight in one piece part).
Is it not clear now that neo-cons excel at describing Keynes's (contra-cyclical) prescriptions as if pro-cyclical financing simulated real economy "recovery"? And that none of these neo-clowns is capable of prescribing, explicitly, fiscal or monetary policy to retire public debt from peak to trough?
Of course not. Volatility all capital markets sustains dependency on financing.
At this point, you must have noticed that the sector supports a variety of business models whose only revenue or solvency horizon is rolling over debt obligations to meet payroll.
I enjoy the philosophical arguements more than the technical aspects as that hurts my small brain. I know it is an oversimplification to draw strict lines and the world is grey. But it's more fun to pigeon hole however it bends the truth. In that regard here is another of my pigeon holing truth benders:
The Road to Ruin is paved with good intentions that get corrupted along the way. I believe we are headed for Ruin (this is when my wife leaves the room) Anyway lets break it down in my 3 ways:
Crony Ruin - Greenspan/Bush
Print money and help our friends out of their jamb (Paulson's original 3 page edict)
Warm and Fuzzy Ruin - Krugman/EU now US too
Print money so government can take control by nationalization or some form thereof
Tough Love Ruin - Ron Paul/Austrians
Do not print money and let them all fail
Anyway you look at it it's still Ruin. Oh Yee of Little Faith.
I guess I like ruminating at the end of a thread. No one really cares as they have all moved on to the next big thing. But I like it here. Less self conscious over being a neophyte/nincompoop although I've been coming here off and on since last December so I feel a sort of membership/kinship but not one of the gang. Lots more still to learn. CR runs a great ship and it's only a matter time before he (and Tanta)make the big time. Although that will not be welcomed by the gang here. Already it seems that a lot of riff raff are showing up. I try to be polite and stay out of the fray. But now I may be going out on a limb by writing so much. Sure way to hang ones self.
Anyway, credit is really debt and we have too, too much of it. Mary refers to rolling it over. We have been doing this at at all levels of society and adding to it for too long. You can't just keep rolling it over, although the Financiers love that game, without at some point paying it back, can we? I don't think so. How do we pay of our debt? Not by creating more of it.
I picked my moniker because I'm a government economist and because the internet allows me to be invisibly safe from my politico bosses.
I also admire Adam Smith's insight into the market as an organizing solution. As a matter of public policy, I think the market solution should typically be the default policy, and that the burden of proof should be on anyone who wants a policy different from laissez-faire. That said, I believe there are plenty of times when the "Free Market" solution is not the ideal solution -- ie, Global Warming, Social Security, mandatory health insurance, energy independence, countervailing tariffs.
Many folks here do not like Krugman. I read the article and it is classic oppositional argument. But give Krugman his due. I believe he is a serious and honest about his view point as Ron Paul is about his. That is why I am torn between them. The Cronies however need to be behind bars.
Thanks for the link. My first reaction is that Krugman probably would not like this article to be shown too widely, because it shows that he really hasn't read Von Mises carefully. Back when he was just a Keynesian professor it probably didn't matter much, but now that he's a Nobel Laureate he's supposed to know it all.
Gary is assuming that "neocons" consider the Nobel prize something of value. It has been devalued by the political bias of the committee for some years now.
Nonsense, it is the most respected prize in the world. Ridiculous attempts (OMG! It's biased!) to denigrate the prize devalue the writer far more than the Nobel.
Another perspective of mine from being here is that CR promotes a forum for Austrians and Keynesians to duke it out while both sides dump on the Cronies. Nice to have a place to gripe and come together but guess whoose still in control?
All they gotta do is get the market above 10K and stay there until after Nov 4th. What a pump today. It's not the PPT its the PTB silly. One heart beat and caribou barbie. Think about that. Ruin anyway you look at it
The "Nobel" in Economics is pathetic. The prizes in the sciences are for finding out new facts about nature and make a permanent contribution to knowledge. If there are comparable achievements in economics, they come along once a decade or so. Also, it's funded by a bank, which is like having the Prize in Physiology or Medicine funded by a drug company.
Which is no criticism of Krugman. He's a good guy, clear thinker and has written some worthile books. My high opinion of him is totally objective and has nothing to do with the fact that I agree with his politics.
At least they didn't give it to a member of the Chicago "School", whose ideas have contributed so much to the current state of the world economy. It would be unkind to call it a cargo cult, because cargo cults are harmless delusions.
emo?
foist
I'm happy that he won it, but concerned that the Nobel committees seem to be becoming particularly political in their choices!
hvhyvh;vb;kjvkhv
irstfay
When do i get mine?
Confused, Krugman is certainly deserving of the award, but I agree that the Nobel committee, in recognizing one of the most vocal critics of the Bush administration, has made it clear the utter contempt the rest of the world holds for Bush and his cronies.
Sorry for repost, but I think it belongs here;)
The Nobel prize for Paul Krugman is being reported in Korea, too.
According to that article, he "was noticed around the world for having predicted the Asian finance crisis as early as 1994".
To Confused:
Paul Krugman has more then earned this award for his contributions to economic theory. Its precisely his technical prowess that gives him the level of credibility he enjoys. He is a "real economist." The mass market books and op-ed columns are just part of his story.
His contributions to international trade theory and economic geography transformed the topic.
I've been looking for this award for several years.
Yawn....who cares.
Let's run through the logic here.
Krugman warned in 2001 and 2002 about the possibly disastrous consequences of letting Bush administration run amok. He pointed out evidence that Bush and his cronies are both incompetent and corrupt.
It turned out he was right. And the people who stayed silent in 2001/2002 and allowed Bush to ram through his policies now are partly responsible for what has been done to America.
And this means that Krugman should not have won the Nobel. Because he was dead on about Bush and his impact on America's future.
Wow.
Not political. Bush was dead wrong on global warming and sat on his hands as the US financial system melted down. It's not politics, it's a matter of who has been proven to be right
Shouldve gone to Mish or Roubini.
I echo the congrats!
I noticed him more than 10 years ago.
I'm no economist, but I certainly appreciated his ability to explain economic and behavioral theories in a way that made sense in the world I live in.
His award came as a welcome piece of good news among a lot of bad news.
I believe Krugman won for his geek side, not his public personna. Also, he deserves a Pulitzer for his NYTimes columns.
impeccable timing...and deserving too!!
I'm in UYG. At least for today
Krugman is like a drug to those who worship him. This just makes him more addictive.
Financial institutions are not the only things going bankrupt. The GOP has been reduced to mocking the Nobel Prize for the past ten years.
the news was taken all that well on CNBC except for that 'kid' from the Times!
Anyone who wins the John Bates Clark medal has to be considered a candidate for the Nobel.
Will he be the first Sec of Treasury to have won a Nobel Prize in Economics?
Sec of Treasury ??
Are you implying he can be bought? How dare you!
Starting green...
Starting WAY green!
Myron Scholes and Robert C. Merto
US markets are open, and they are popping.
GM opens up 42%...
GM drops 10% from the open in two minutes...
CR,
It must be nice to be a Nobel laureate's "go to guy" on certain economic topics.
Wow!
If I still watched CNBC, it would be worth tuning in to see right wing shills like Gasparino and Kneale splutter about Krugman's award.
Congrats, Krug!
Tatsuya continues the banking crisis comics:
http://sinfest.net/comikaze/comics/2008-10-13.gif
congrats to the prof!
..................
OT
so is this the bottom? is the consumer ok spending more than they make now?
some how i think there is still a world of pain out there. whether WS reflects this in 6 months, i have no idea.
any guesses as to how far down the road the can has been kicked?
Intelligent and socially responsible people only seem to make it into powerful public positions by accident.
Even intelligent and socially deviant people don't seek public offices, as they would prefer to rule via proxy as to have at least one layer between themselves and the guillotine.
Only boobs take these jobs. Even our illustrious Paulson is just a puppet in a bigger sadder tragedy.
The Nobel committee chose Krugman? After choosing Gore? And you think that's political?
Part of the problem in our thinking is that we tend to see issues of (factual) right and wrong in political terms, because we settle issues of public policy through politics. As Anonymous 10.13 notes, though, Krugman has been (factually) right. The Nobel folk do attach a barb to their choices, but not just aimed at the US. They've aimed their barb at the financial industry (Grameen) and the bloodier participants in the Northern Ireland struggle, to mention a just a couple. Gore, too, was on the (factually) right side of an important issue.
Krugman offered the Nobel guys the opportunity to use him to make a point by deserving the Prize. I'm surprised that they chose economic geography (though I suspect Krugman won't be) because I thought they had a love affair going with finance and would cite his extension of whatsisname's FX theory (that funny German fellow who died too young - never can think of his name) thereby honoring two birds with one prize.
Back to politics, though. Krugman is a gadfly, a man who insists on speaking the truth no matter who is annoyed. The result is that powerful people work to confuse the public about who is telling the truth - nothing new there - by sending out a small army of liars to whittle away at his message. Politics inspires his attackers, but it is unfair to see what Krugman does as primarily political. Politics have been thrust upon him because he wants to tell us what is really going on.
Krugman is considered too political because he was right too soon. When Bush was running he said that Bush's numbers couldn't possibly add up and weren't honest. People weren't ready to hear that, so he earned the nickname "the shrill one"
(from "I used to like him when he wrote about economics, but now he's so shrill").
But perhaps the time to have contempt for people who are right too soon has passed. Let's ask CR and Roubini.
@ Builder Bob
In the big picture, we have waves of crisis coming over the next several years. At least 3 that I can see.
We are expereiencing the first wave now which is the financial crisis. And our current financial crisis has 3 or 4 swells within the wave.
IMO we are only in the first swell which was the subprime implosion. Next swell is the Alt-A implosion and the swell after that is all other debts (credit cards, auto, school, LBO, corporate, muni's) along with the accompanying layoffs and reduction in incomes.
The world's debt is going bad and it is just starting, again, IMO.
So kicking the can down the road is all they have....not sure how far it can be kicked though.
so is this the bottom? is the consumer ok spending more than they make now?
some how i think there is still a world of pain out there. whether WS reflects this in 6 months, i have no idea.
Subprime is only the appetizer.
http://www.goodevalue.com/wp-content/uploads/2008/04/imfresets.jpg
You'd like to believe that Krugman's selection was based on his academic work and not his New York Times writing but when frauds like Al Gore and Rigaberto Menchu win Nobel Prizes one isn't easily convinced.
There's nothing political about this. The prize is for work done long before the Bush administration came to power.
Wow, the Krugman's win is announced and the market jumps 420 points!
Nothing's shocking... except the fact that the 10-year yield is hardly budging.
wtf
Bond Market Collapse is Imminent
By Adrian Douglas
Bond Market Collapse is Imminent
Will he be the first Sec of Treasury to have won a Nobel Prize in Economics?
Krugman will never be Sec of Treasury. He hates administrative positions; he does not even want to be Department Chair. He has said several times on his blog that he is not interested in a position in the next administration.
You'd like to believe that Krugman's selection was based on his academic work and not his New York Times writing but when frauds like Al Gore and Rigaberto Menchu win Nobel Prizes one isn't easily convinced.
The economics prize is separate from the prizes for literature, peace, etc. as has been kept less political for the most part.
There's no doubt that Krugman deserves this award, whether people agree with his politics or not.
pbpcbs writes:
Wow, the Krugman's win is announced and the market jumps 420 points!
Nice spin, go work for CNBC.
This one paragraph, from The Great Unravelling, was good enought to win him the Nobel -- of course, the Swedes had to rummage around for a respectable, 'professional', 'economics' reason:
Written in 2003....
Usually right-too-soon is worse than wrong-with-everyone-else. This appears to be an honorable exception.
There's no doubt that Krugman deserves this award, whether people agree with his politics or not.
Sounds a little bit authoritarian, but then that's where the system is heading it would seem.
Bond Market Collapse is Imminent
By Adrian Douglas
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Jan $70 TLT Puts are asking $2.10. Friday they were asking $0.25.
i thought the bond market in us was closed because it is a holiday
OT:
I'm still waiting for my f&*kin pony.
Apparently Ben is giving the entire f&*king world ponies.
Bush Says U.S., Other Governments Working to Stabilize Markets - Bloomberg.com
WAIT TILL BILL O"REILLY HEARS ABOUT THIS HIS IS GOING TO SHIT HIS PANTS.
Krugman may also have the award for the most published corrections required of a NYT's op-ed columnist. It would be funny if the missing minutes of that Enron Board meeting Krugman addressed did finally turn up after the award was handed over.
I completely believe that Krugman's work is deserving of a Nobel.
However, I also believe that the odds of it having been selected over the competition would have been much slimmer sans the politics.
I think he would could make a great Sec. of Tresury.
I would certainly hope he cleaned house in the treasury dept. ridding it of the massive conflict of interest types. 4 GS execs in chanrge of the 'cash for trash' program.
They are not even trying to make it look like they are avoiding conflict of interest.
At any rate, conrgats to Krugman and I hope he has some place in the next administration.
Funny image of Princeton Power!
Why DOW isn't rally? +4% Only? Its fellow European index are doing a lot better!
Well, that bounce is over.
Congratulations to Krugman. I'm pleased he has received the recognition he deserves.
And now GM is down 20% from open.
The bankruptcy spec stocks soared in the first minutes... like MOT... but they're having major trouble holding the pops.
So far, the big money after the open has been in shorting the Chap 11 candidates.
Well. done. professor.
I had no idea there was so much cash involved -- $1.4 million!?! Are you kidding me?
I wonder if Dr. K is going to make it rain tonight.
GM has about 36 hours to live
Nobody,
I'm also beginning to think the bond market is going to get crushed. Someone mentioned it around here a few weeks ago and I didnt think much of it at the time. I'm a believer.
I also think some of those mortgages that will reset in 09 and later will be ok. I think that the borrowers will be helped.
I also think that consumer spending might get curtailed say 20%. (Totally made up that number.) Still that will wreak havoc on earnings etc...
Too bad the committee is diminishing the prestige of the Nobel prize. Gore and now Krugman.
I wonder if Krugman can postulate on the impact of a significant global cooling trend just as we have spent significant material and political resources on the wrong problem. When people experience economic issues they get restless. When people don't have food they can get real ugly.
Dornbush. Krugman extended the Dornbush model.
Krugman said when he took up the NYT job that he was doing it because it put strict limits on his popular writing, thereby giving him time to get back to serious research. Ah, well. Now he's stuck for a year making speeches.
He won't be Treasury Secretary because that requires him to repeat an agree-upon set of points, even if those points are untrue. The Committee had plenty of time to name Krugman, and plenty of older economists in line who are more deserving. He was chosen now because he is a gadfly. Even if he were a normal mortal, he'd realize the glaring irony of taking a job that requires him to speak power to truth after winning the Gadfly Prize.
What's wrong with Sweden? Don't they know he is SHRILL!!!!!
I wonder if Dr. K is going to make it rain tonight.
Shnaps
LOL ! ! ! !
What a suprise. A liberal won a Nobel!
I also think some of those mortgages that will reset in 09 and later will be ok. I think that the borrowers will be helped.
Let's hope so. It definitely creates a political fiasco, though. The government does not have the resources to help them all. And how do you tell one person that they will be helped and another that they won't?
"speak power to truth" - very funny.
Thats Ballgame Comrades writes:
GM has about 36 hours to live
Thats Ballgame Comrades | 10.13.08 - 10:04 am | #
--
why is this?
Bravo !
While I'd like to believe that the award of this medal was entirely for economics work, I suspect that a small amount of it has to do with the situation we are currently in, and his continued criticism of how we arrived here.
Prof Krugman's bully pulpit just gained more validity and (deserved) attention.
Hope you longs sold at the open, this rally does not seem to have strong legs.
Roubini in next in line for predicting the 2008 meltdown ?
w writes:
What a suprise. A liberal won a Nobel!
When non-liberals persuade the world that it is only 10,000 years old, then they may win one too.
I guess this cements Obama's Treasury Secretary pick. Krugman has been running for office for the last 6 months. He stopped valuing the truth as much recently to suit his aims.
Organic George writes:
Hope you longs sold at the open, this rally does not seem to have strong legs.
Organic George | 10.13.08 - 10:13 am | #
+300pts is a "Rally"? With those ridicoulos volumes? O_____O
Anyone else looking at the price action on JPM?
I know that they've been trading disjoint from the rest of the financials for quite some time, and while I would not have expected a material rally today for JPM (since the market unlike me has not been expecting them to need help, and seems to have been fine with the LEH CDS auction last week), why a 3.6% sell off in this market?
Something's probably cooking...
Organic George writes:
Hope you longs sold at the open, this rally does not seem to have strong legs.
Oh Yea of little faith. We're only 1/2 hr into it. The PPT hasn't even had their first cup of coffee yet.
In the RED by the close ?
Gainas, don't be silly.
Libor no longer represents interbank lending rate.. it represents where corporates borrow from banks.. banks can borrow cheaper from the Fed, so what does Libor now represent?
Libor is more of an asset now than a liability... any thoughts or comments?
In the RED by the close ?
bearly
seems possible to me. then again i wouldnt bet against the NYCBF (whats that Jas acronym?)
.....
Congratulations to Prof. Krugman. Jean Tirole was my candidate though...
Do you think this would make Bush listen to him now ?
Most likely the action in the financial stocks can be attributed to allowing the Treasury the lowest possible price for the preferred equity it will be buying.
Once the price is set....yet another bottom call will be made.
I wonder what Mitsubishi was given so that they can stomach a 35% loss on it's "investment".
Hold and Hope....good for large banks as well as PCA.
Ciao
MS
We will close Red or Green today. Mark my words.
There was a story last week that Corps were lending directy to each other bypassing the banks.
So I don't know what to say about LIBOR
If a Nobel Prize winner specifically refers to your comment in one of his articles, do you win a prize, too?
Re: Krugman as Sec Tres. What did Johnson say?: "I would rather have him in the tent pissing out, than outside the tent pissing in"?
Krugman will stay outside the tent, unless a gun is held to his head, and will be pissing off the Obama administration to no end.
I hope. I hope. I hope.
Green until about mid-day Weds.
Gotta shake out all those puts....
OCC staring at one helluva payout if they don't.
Ciao
MS
Now, all we need is Brad DeLong as next Fed Chairman or Treasury Sec, and the liberal-left blog-academic hegemony will be consolidated.
If a Nobel Prize winner specifically refers to your comment in one of his articles, do you win a prize, too?
No, but you do get to move up in the line for a pony.
I see that a few idiot yahoos have turned up here.
1) Confusing the Nobel peace prize with the Nobel prize in economics? Check.
2) Sputtering about Al Gore? Check.
3) Regurgitating stupid global-warming denier talking-points? Check.
But, I already got my pony last week...
Index holding up however individual stocks are not.
Just another "fun with SPX" day....
Ciao
MS
Libor is more of an asset now than a liability... any thoughts or comments?
Only that we should never, ever again have a thousand-comment thread where we mangle these terms. LIBOR is a statistic, which tracks an expense. It is neither an asset nor a liability.
Naadir Jeewa
The Chicago Boys trashed the world economy so what's wrong with letting the adults take over?
Figurative speech is getting more and more lost on all these literalists in our little peanut gallery here.
I wonder if this will spur the protests of former winners like the friedman selection did? The protest was huge with the Friedman selection, and history has confirmed there protests were warranted, as imaginary and superstition based Friedman policies have gotten us into this mess.
Are they reserving the "Piece" award for Sarah Palin?
You have to give Krugman props for seeing what others didn't in 05.
Calculated Risk: Krugman, Housing, etc.
This was the icing on the geek for me. Congratulations -- well deserved.
We will close Red or Green today. Mark my words.
There is usually one other slot on the wheel, marked zero. Unless this isn't a real casino, and I'm confused.
Congrats to Prof.Krugman!
I'm not sure which to savor more, the well earned award for my favorite economist (sorry CR you're a close second) or the schadenfreude from watching hundreds of bitter neocon heads explode!
The reality based community wins one. And Mr.T eats his own poo.
The Nobel committee chose Krugman? After choosing Gore? And you think that's political?
FYI to the folks that keep comparing Kissinger, Gore, etc.
There is a huge difference between how the Peace prize is chosen and how the Economic prize is chosen. (And both are separate from something like physics.)
Gore & Kissinger won the Peace prize, not economics.
Are they reserving the "Piece" award for Sarah Palin?
Mel | 10.13.08 - 10:27 am | #
Got antlers?
Sure hope you shorts took advantage of that lull during the past half hour to secure cover - the rally seems to be finding it's legs again.
You win awards predicting Bush economics would fail?
Here is my prediction, they are going to do everything possible to kick this can down the road till the election is over and then run for the hills!
A few well-timed "upgrades" never hurts the chances of extending this sucker's rally.....See BAC
I gather you are holding MS Popeye??
Ciao
MS
OCC staring at one helluva payout if they don't.
Yeah, because you know, like, there aren't any real people on the other side of those positions, and like, you know, no one ever has to post margin on an exchange traded option.
Sheesh.... here's some more tinfoil...
I am red/green color blind. I don't know where we are going, but we are making good time.
No, Krugman won the Nobel Prize for repeating the conventional liberal wisdom from a prominent column in The New York Times. It's as if he won the Nobel Prize for Hating Bush.
You don't think was it for Krugman's previous work as an advisor to Enron, do you?
Nevertheless, congratulations are in order for the man who endorsed Paulson's TARP plan with the incisive phrase, "Yuk. Phooey. I guess so."
"You'd like to believe that Krugman's selection was based on his academic work"
You certainly can believe it. Anyone who wins the Bates medal is considered Nobel material.
Gore, a fraud? Wasn't he right about global warming?
MS,
Yep... bought Fri.... retail and a couple pharms. I'm not brave enough for financials.
ERic-
Go look up the put call ratio and tell me if you think it's balanced...
Not a chance.
Ciao
MS
@ Gary
"The reality based community wins one. And Mr.T eats his own poo."
LOL. I have no problem with Krugman...I just think that it is not a big deal.
We are on the titanic IMO....and we are clapping at some guy who won a round in one of the first class cigar room poker games aboard the ship.
"i'm not brave enough for financials"
MS not a financial???
Ciao
MS
So I wanna know, does this mean all the other professors at Princeton are going to give him pens like at the end of "A Beautiful Mind?"
And if so, how many pens does he get.
Go look up the put call ratio and tell me if you think it's balanced...
You missed my point.
For everyone long a put, someone has to be short. All those people short puts have to post margin.
Unless you believe someone's not posting margin, what's the problem. And this isn't some shadowy CDS, this is an exchange traded product.
Gore, a fraud? Wasn't he right about global warming?
no way. that's why we have all these extra icebergs popping up all over the place.
I do find it interesting that people equate Gore's Nobel with Krugman's Nobel. They have little to do with one another.
another thought for those of you who have exploding heads today:
The Nobel process is INTERNATIONAL. thus, they don't see things through the Amerocentric liberal-conservative way. Only Americans have been brainwashed into thinking that one must belong to one of two supergroups. Instead, the other countries in general have many parties that have different ideologies.
thus, for them "liberal vs conservative" doesn't mean as much as it does here.
from an international perspective there is no doubt that global warming exists (at this point I'm not saying they're right, I'm saying that's what is believed internationally). thus, all the major western countries save one (the US) signs the Kyoto Treaty. the US is left out. Thus, it is no surprise why Gore won the Nobel. Not to piss on GWB, but because it's in keeping with Western principles (excluding the US).
Likewise, Krugman's writings are in keeping with INTERNATIONAL thought. Sure, GWB et al are on the outside of this. but this is what happens when you say things like "deficits don't matter" or when you go to the UN and tell them that they don't matter just before you attack a sovereign nation.
so my thought is NOT that these prizes are given to "liberal" people. They are given to people who espouse positions that are equivalent to INTERNATIONAL positions. In general, the American libs are more in keeping with international Western ideologies. (for better or worse).
Nevertheless, congratulations are in order for the man who endorsed Paulson's TARP plan with the incisive phrase, "Yuk. Phooey. I guess so."
My favorite expression of his was "gurk". Not sure he coined that one though.
I used MS to refer to you - thought it was your name. I bought ABT, DNA, TGT and WMT
Confused wrote:
I'm happy that he won it, but concerned that the Nobel committees seem to be becoming particularly political in their choices!
what... a notion that one can separate economics from politics
the central questionn of economics..what goods and services shall be produced, how those goods and services are to be produced, and whom gets what portion of that production
what , how, and for whom...sounds like politics to me
Krugman is an economist with a soul and and he is a genius who can explain his ideas to morons like me.
congratulations to Paul Krugma
I like Kruggie cause he's not an idiot.
The government does not have the resources to help them all. And how do you tell one person that they will be helped and another that they won't?
Simple. Everyone is looked at as 'equals'. However, some are more equal than others.
In that case, its pretty easy to tell one person they are getting help, and another that they are not.
MPinCO wrote:
Too bad the committee is diminishing the prestige of the Nobel prize. Gore and now Krugman.
yeah and Friedman too
(snark meter pinned)
I do find it interesting that people equate Gore's Nobel with Krugman's Nobel. They have little to do with one another.
That comparison began in response to someone who claimed "Bush haters" were preferred by the Nobel cmmte. The comparison was made to show facts and reality are in play not bashing Bush.
So I wanna know, does this mean all the other professors at Princeton are going to give him pens like at the end of "A Beautiful Mind?"
Darn, the Princeton website says that ceremony was made up by Hollywood.
The Nobel process is INTERNATIONAL. thus, they don't see things through the Amerocentric liberal-conservative way. Only Americans have been brainwashed into thinking that one must belong to one of two supergroups.
to further elaborate this:
why in America must "global warming" be a liberal idea?
Can a pro-free market business person not believe in global warming? why not?
see, it doesn't make sense. Global warming has nothing to do with believing in free markets. Yet for some reason in America most people who believe in free markets are FORCED to believe that global warming doesn't exist.
take me: there is no party for me. I am very fiscally conservative, but very socially liberal. I believe in pro-business principles, but I do NOT believe in unfettered unregulated "free markets" (since that's partly what got us here... hello OTC CDS market).
In other countries I could belong to a political party with others that agree with my viewpoints (socially liberal fiscally conservative) but in the US I have to choose socially conservative fiscally conservative OR socially liberal fiscally liberal.
That said, the last 8 years the republicans have become socially conservative fiscally irresponsible, thus they have nothing for me.
see?
I haven't read Krugman's paper(s) that won him the Nobel Prize and hence have no opinion on the matter.
I will say, Krugman was a wishy washy on the housing bubble. He was a bear, but he always hedged himself in the interviews I saw.
Most of the folks on this board had way more conviction than Krugman with regards to the eCONomy. Krugman's strongest convictions were political and NOT economic.
Eric-
I'm well aware of how Options work. You think they actually are truthful about posting such stats?
That's pretty funny.
Take a look at spreads.....Put writer's don't want to go long on ANYTHING....that's why the spreads have been ridiculous.
Howlingly funny that you think there is transparency in that market but not in the rest.
Ciao
MS
popeye-
Did you not post in a few threads back that you went long MS?
Could have sworn you did..
Ciao
MS
Krugman is a Keynesian. He believes central bankers can interfere successfully in the capitalist economy. He trusts central bankers. He believes war and public projects can help the economy. He thinks 'The New Deal' ended the depression. I wonder why it lasted 10 years?
Nope... I don't play with those guys.
One of the things that really bugs me about this financial mess is that the U.S. decided to back all the FNM & FRE paper. WTF.
Foreigners bought FNM & FRE paper of their own free will. Now we're stuck with all the future losses, while foreiners get guaranteed returns.
Absurd. In a sense, we're funding their bailouts.
We are on the titanic IMO....and we are clapping at some guy who won a round in one of the first class cigar room poker games aboard the ship.
Mr. T. | 10.13.08 - 10:39 am
we're clapping for a guy who tried to call attention to the iceberg
ok...just went back...someone else asked you the same thing.
Sorry for confusion.
Ciao
MS
Take a look at spreads.....Put writer's don't want to go long on ANYTHING....that's why the spreads have been ridiculous.
Right....
but markets aren't margin. You have a choice about what price you quote. You can't refuse to take a phone call from Mr. Margin.
Are you really saying you think the OCC is going to fail to pay out? If so, you really need more tinfoil.
Angry Saver writes:
One of the things that really bugs me about this financial mess is that the U.S. decided to back all the FNM & FRE paper
I read somewhere that Paulson sent Kashkari to meet with China and China told him FNM and FRE paper better get backed or else
Congratulations Professor Krugman!
OT: Berkeley's Brad DeLong would be great but he is a bit young. I prefer Stiglitz because of his rhetorical ability. (Either way, the wingnuts would go completely postal.)
JP and company,
Your insistence that we all view the Nobel choice through your lens is a little embarassing to watch. The presumption that it is "information" (in the FYI sense) to the rest of us that Gore won a different prize than Krugman is kinda silly. You know no more about the selection process for Krugman's prize than is available in the press, unless you are part of the process. If others look at the same information and come to different conclusions, there is room for disagreement, but no room for you to "correct" the rest of us. You simply don't know enough to correct anybody. Yunus won the Peace prize for creating a new banking system. Why? It was more closely associated with economics and finance (finance has been a dominant them in research honored by the Committee) than war and peace. There are some seriously bad instances of widespread violence and efforts to quell them going on around us. So why the Peace prize for an economist who set up a financial system? One reason is that Yunus wasn't being honored for theory, and it is theoretical (and mathematical) contibutions that the Economics Prize is meant to honor. So the Committee just decided that a banking innovation which contributes to the welfare of the poor leads to peace. All done. Arguing that we must look only at the formal categories and the formal process for handing out prizes is kinda small minded.
An FYI on that Kissinger Nobel... "Lê Ðức Thọ and Henry Kissinger were jointly awarded the 1973 Nobel Peace Prize for their efforts in negotiating the Paris Peace Accords."
Le Duc Tho had the good sense to turn down the Nobel, on the grounds that 'there is still no peace" in his country, Vietnam.
No Eric I never said they would fail to pay out....what I did say is that they are facing one hell of one if the markets stay here.
Big difference that.....
Ciao
MS
WOOT!!!
Yay, PK!!
Yearning to Learn
others
the cataclysmic thing about global warning
is that both sides are correct
global warming which is CERTAINLY taking place is
both caused by natural events and
man made (anthropogenic) effects
they are adding together...we are in serious serious trouble
the more correct term, climate change will make some places cooler and some hotter, some green places become desert and some deserts get wet
social disorder
Angry Saver, who do you think have been funding your empire building?
LRC:
"Vulgar Keynesian Paul Krugman of the NY Times and Princeton has been awarded the 'Nobel' prize in economics, as Bill Anderson notes. Unlike all the real Nobel prizes, which were established and funded by Alfred Nobel, the economics prize was established and funded by the Swedish central banks. With the sole and shining exception of F.A Hayek, who was forced to share his prize with a Swedish communist, every other Nobel econ winner has been a shill for central banking. This year especially, the central bankers wanted a loyal propagandist for endless currency depreciation."
"Krugman will never be Sec of Treasury. He hates administrative positions; he does not even want to be Department Chair. He has said several times on his blog that he is not interested in a position in the next administration.
Walker "
I agree. But not because he said so. He only said so because he has aligned himself to the Clintons and has unprofessionally attacked Obama on many occasions showing he is too political to be taken seriously.
Sorry, Krugman, but Obama WOULDN'T hire you. You shot yourself in the foot. Enjoy your footnote (Nobel's econ awards are footnotes, get over it), your glory days are over.
One of the things that really bugs me about this financial mess is that the U.S. decided to back all the FNM & FRE paper
that's the price you pay for being a debtor nation. China had the Mutal Assured Destruction card.
we back their claims, or they repatriate all of our dollars and/or stop buying more of our debt.
we are both their slaves and their masters.
You know no more about the selection process for Krugman's prize than is available in the press, unless you are part of the process.
Your either/or is incorrect, I have never been directly involved, unless you consider conversations with those who are choose as involvement.
So I say again: The process by which the Peace prize recipient is chosen and the Economics prize is chosen is vastly different. Though the process for peace/economics/physics looks positively close compared to literature.
we back their claims, or they repatriate all of our dollars and/or stop buying more of our debt.
we are both their slaves and their masters.
I don't like it one bit. Furthermore, I don't see how that kind of relationship can continue. If it can't, it won't.
Good lord, doesn't anyone ever get this right? I like Paul a lot, and he deserves the recognition, but this IS NOT A NOBEL PRIZE.
It is "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel", and it's awarded by a Swedish bank, not a "Nobel committee".
It is a very prestigious award in economics, but it is not, for the last time, a Nobel prize.
-Walt
mock:
I agree with you. There is little argument from most knowledgeable parties (it would seem) that there is in fact climate change that is occurring.
The argument is moreso how much of this is attributed to the actions of man.
as with all things, the cause/effect are likely multifactorial and interrelated.
I highly doubt that dumping tons of Carbon into our atmosphere is helping the matter, even if it isn't the full "cause".
I'm just saying that I find it humorous that Americans find this "need" to polarize into left and right. And then people are forced to choose right or left especially when the various arguments have nothing to do with right or left.
this is opposed to Europe IMO where you can choose a spectrum. (like middle left or far left, or you can have socially left fiscally right and so on)
Americans thus take the decisions of an INTERNATIONAL body and try to distill American values into it.
it just doesn't work
so I brought my own theory: that the International Nobel committee chooses people who are aligned with international ideals, whether or not those ideals are "right" or not is immaterial.
and the "politics" that the American-right cry about is likely not quite how it works.
in other words:
if you choose to be a "Maverick" and go against the grain, don't be surprised to not win awards from the group you're Mavericking against.
Just like I don't rate well on Mish's blog... because I don't believe that "truly free markets" are possible, (great utopian ideal), I don't believe that the "free market" always is right, I don't believe that Gold is the "only true and honest currency" possible, and so on.
No Eric I never said they would fail to pay out....what I did say is that they are facing one hell of one if the markets stay here.
Big difference that.....
But unless you think someone's not answering margin calls, it's a big NothingBurger.
It's not like the OCC is on the hook for it.
I just don't see any cutting edge economics on his part and this award represents the lack of depth in economics. As usual politics wins out.
Re: The Nobel citation said Krugman's approach is based on the premise that many goods and services can be produced at less cost in long series, a concept known as economies of scale. His research showed the effects of that on trade patterns and on the location of economic activity.
In contrast to his treatment of U.S. financial officials, Krugman has praised leaders in Britain for their response to the global financial crisis.
In an Oct. 13 column in the New York Times, Krugman wrote that British Prime Minister Gordon Brown and Chancellor Alistair Darling "defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up."
Whereas U.S. Treasury Secretary Henry Paulson rejected a "sort of temporary part-nationalization" involving governments giving financial institutions more money in return for a share of ownership, the British government "went straight to the heart of the problem ... with stunning speed."
Krugman said the major European economies have "in effect declared themselves ready to follow Britain's lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts."
"And whaddya know," Krugman continued, "Mr. Paulson -- after arguably wasting several precious weeks -- has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities."
that's the price you pay for being a debtor nation. China had the Mutal Assured Destruction card.
we back their claims, or they repatriate all of our dollars and/or stop buying more of our debt.
we are both their slaves and their masters.
Well excuuuse me, the US does not only owe china, that 10T goes to the majority of the world.
And you reckless spenders and warmongers better make good your promise to pay. Otherwise you'll have to lose your worldwide dominance as germany has said.
I don't like it one bit. Furthermore, I don't see how that kind of relationship can continue. If it can't, it won't.
funny... parasitism is like that, isn't it?
now which one of us is the parasite, and which the host?
hmmm... perhaps it's more symbiotic than either party would like to acknowledge.
I agree, it likely can't continue ad infinitum. but it can last longer than any of us live.
So why the Peace prize for an economist who set up a financial system? One reason is that Yunus wasn't being honored for theory, and it is theoretical (and mathematical) contibutions that the Economics Prize is meant to honor. So the Committee just decided that a banking innovation which contributes to the welfare of the poor leads to peace. All done.
Interesting interview with Yunus:
"Capitalism Has Degenerated into a Casino"
Interview with Nobel Laureate Muhammad Yunus: 'Capitalism Has Degenerated into a Casino' - SPIEGEL ONLINE - News - International
Krugman will never be Sec of Treasury. He hates administrative positions; he does not even want to be Department Chair. He has said several times on his blog that he is not interested in a position in the next administration.
Don't you believe him. He's had political positions in the past, and almost any economist interested in finance would kill to be SecTreas now. Also a disinterest in petty academic politics has little to do with a disinterest in redesigning the international financial system.
Uh-oh, Bush is talking, look out below!
Good lord, doesn't anyone ever get this right? I like Paul a lot, and he deserves the recognition, but this IS NOT A NOBEL PRIZE.
You are correct that Alfred Nobel did not set up this prize, but the Nobel foundation has adopted it, which is why you will see it listed under "Nobel Prize Announcements 2008" by the foundation:
Nobelprize.org
I'm thrilled for Paul!
I've been reading his pieces in the NYT since he started. He is the reason I became interested in socioeconomic research and the effects and outcomes of economic hardship on families. Someday I'll be a policy wonk and it will be all Paul's fault >; )
Mish and Roubini are certainly not out of the running in future years. I can see some great publishing to come from these two (not that their current bodies of work are lacking).
Mish and Roubini are certainly not out of the running in future years
An austrian trained economist will never win the prize.
now which one of us is the parasite, and which the host?
I do not know but if they were buying our paper with their paper to keeep the price of their paper low so we would buy their stuff and bring their country out of third world, what happens if we cannot afford to buy their stuff?
Mish and Roubini are certainly not out of the running in future years,/i>
Mish is out of the running. in fact he was never in the running.
He is too much a devotee of the anything goes Free Market system as well as a massive gold-bug. Plus he doesn't have the academic credentials. (he's very smart though)
roubini would be a possibility, however there is a chance he'll be blamed for the mess if it gets too out of hand...
I'm not gonna beat a dead horse, but Krugman has never been cutting edge and to suggest he stands out as being the finest economist is just another reason to keep your children out of the field of economics, as economic theory is equal to a degree in Polysci and Philosophy, and there is no way in hell anyone will make a living doing what these people do!
FYI, here is some great work, which will be remembered for all time, as this was so important to economics:
Or to use a somewhat different metaphor: in many cases, aspects of natural geography are
able to matter so much not because natural features of the landscape are that crucial, but because
they establish seeds around which self-reinforcing agglomerations crystallize. So it is precisely
the aspects of the economy that in principle allow history-dependent, multiple equilibria stories
to be told that in practice give exogenous geography such a strong role.
Boring, simple and meaningless and a step away from home economics theory!
what happens if we cannot afford to buy their stuff?
Ahh! the important questions come out.
Like I said: who is the parasite and who is the host!
Congraulations, Dr. Krugman. You sparked my interest in economics when a co-worker gave me a copy of The Great Unraveling. You made a complicated subject interesting and entertaining. I know that you won your award for your academic work, but I think your ability to make a subject understandable to the "rest of us" is invaluable at a time like this. Thank you.
OOPS! This Nobel comes at a bad time for me, when I just made some mildly unflattering comments about Krugman on the Economists View blogsite. I guess I won't blog there for a few weeks.
I was comparing Krugman unfavorably with Roubini, with respect to their forecasts about the Economic Trainwreck. I still think I'm right, but I will not criticize The Laureated One, at least for a while.
Anybody who comes up with the line "I am a Jelly Donut" deserves a prize.
Krugman, you knucklehead you. C'mere. Drinks are on...
Do CR & Tanta get the Blogging Nobel?
Roubini was shafted. He should have won.
I wonder whether the DJIA is even going to attempt to break 9k at any point today. Seems to be just bumping along in the upper 8900s.
krugman is a political hack and the only reason he was "correct" is because he criticizes republicans because the president is one. this is easily as much caused by barney frank and chris dodd, as well as the federal reserve. its not like he is ron paul, jim rogers, peter schiff who have been warning about this stuff for years and not because of partisan politics but because they udnerstood the fundamental issue of the US economy.
resting this problem just on bush (who is terrible) ignores the magnitude of the fundamental issues that caused this and is just as wrong as saying bush had nothing to do with it. the two parties are corrupt. and the nobel prize is a joke. this stuff just gets more sickening everyday.
kharris:...his extension of whatsisname's FX theory (that funny German fellow who died too young - never can think of his name)
Dolde ("new" theory of information asymetries in derivatives use, i.e. arbitrage)?
or Marx or Engel ("new" theory of global urbanization)?
I'm not impressed either, Imnotimpressed. Then again, I pretty sure economics is politics, and the prevailing wisdom today is free trade of capital, damn the (systemic) consequences. Sadly, the Nobel committee had already awarded this year's literature prize to someone else.
Which of Krugman's 200 articles and 20 books prescribed federal regulation of finance industry?
Yes, Krugman is partisan hack, but that doesn't diminish the fact that's he, and many others, have seen the housing bubble from way far away, and the fact that's he's a very good economist.
If you want to see what all the fuss is about Krugman, read "Age of Diminished Expectations". Some people have bashed it for being "wrong", but as the current crisis is proving, he may have been just "early".
That being said, I deplore his partisanship, but appreciate his economics.
Nevertheless, congratulations are in order for the man who endorsed Paulson's TARP plan with the incisive phrase, "Yuk. Phooey. I guess so."
El Cliffo | Homepage | 10.13.08 - 10:37 am
Perfect.
I started reading the NYT every morning from 1985 to about 1998. Every single day. Apart the deterioration of news content over all (not to mention regular Friedman and Dowd), Krugman's vascillations during his tenure finally tripped my last nerve.
The first 100 days are going to be scary for me anyway. Recent float on Treasury and FRB nominees has not inspired confidence in "change we need." Sorry. Finance capitalism with choice of lipsticks is here to stay.
IMHO, Krugman deserves it.
First, much like CR, he generally uses a strong real-data driven argument and explains how he analyzed it. You may not like his views, but it is hard to argue he is wrong on the basis of his basic facts or is obscuring his analysis.
He also has that rare gift of being able to simply and clearly explain what is going on. This is not easy, to paraphrase Mark Twain when writing a letter to a friend, "I apologize for having to write you a long note, I didn't have the time to write a short one."
Economically he gets constant positive reviews by the only audience that counts, other serious economists (and more importantly, their citation references). As I understand it, he also specializes in important and understudied areas like currency crisis, trade balance and exchange rates. (His papers also generally make my eyes water, and this is after my surviving more calculus and engineering courses than I'd like to think about.) If nothing else he deserves props for intellectual output, energy and endurance. Just writing a column like that for a major newspaper (not to mention actively blogging) would be enough to wipe most people out. And, politics aside (although they most likely played a role and sweetened the deal for the Swedes), Krugman had to at least be a gold medal insightful, serious and current economist to be even considered for this prize.
Finally, as noted above, he painted a huge target on himself in the post 9/11 era by daring to be publicly unpopular and doing so in many funny and insightful ways. Much the same could be said of William F. Buckley on the conservative side in the 60's and 70's. Whatever you think of his views and politics, that took guts and more than a little personal risk. I see Krugman as a continuation of a fine tradition of American Curmudgeon-ism (that includes the likes of Buckley, Mark Twain and Will Rogers) which has the temerity to speak gawd-awful hurtful, but necessary, things to that touchy and peevish giant that is popular public opinion.
Congratulations Prof. Krugman, Molly Ivins would have been proud.
All Nobel Prize winners are shills for the central Bank. The only Exception was FA Hayek. He was less militant in his libertarianism than his other Austrian School compatriots like Mises and Rothbard. If you are not, then you will not get the So called "Nobel Prize" awarded by the central Bank of Sweden. This is not awarded by The Alfred Nobel foundation.
--Andrew, couldn't have said it better. Congrats Prof. Krugman!
I guess this cements Obama's Treasury Secretary pick. Krugman has been running for office for the last 6 months. He stopped valuing the truth as much recently to suit his aims.
Eastside | 10.13.08 - 10:14 am |
May I point out that Krugman was late to the Obama party. He was a Hilbot til she dropped out. I think he's come around now, though.
He'll serve if he's asked often enough. We sure do need him.
Everyone knows that the facts have a well-known liberal bias.
I like Krugman but I'm an economics neophyte. As I understand this world there are 3 major schools of thought on the subject:
Chicago School - Let the free market rule
Keynesians - Governments need to rule through control of money
Miseans - Old school hard money advocates, gold bugs, etc.
This site seems to reflect more of a battle between the Keynssians and Miseans. Bush and the Chicagoans, Greenspan et. al. being discredited these days.
Feel free to correct me if I'm wrong in my over simplifications. But where is Krugman. I presume he is still a Keynesian at heart. But aren't we all Keynesians now (as Tricky Dick said many years ago he was). This weekend seems to be if not a final culmination of this certainly a capitulation of sorts.
I think Krugman is an enlightenned Keynesian. But I also side with Miseans. Are we now in an era of battle between these forces. I may be wrong in writing the free market Chicagoans off so soon however. Facinating times.
CR,
If Krugman can win a Nobel Prize, then you should be a strong contender. You've got to go public, so we'll know who to nominate.
Blackoctober,
Actually, the Austrian School economists (such as Mises) are very libertarian, and usually like free markets.
Another group of economists that are worth reading are the Supply-side economists, who have some good ideas but love to pig out on cutting government spending.
I've studied under profs from all the schools you've mentioned, and all of them have some good ideas but none of them have all the answers.
Some other neophyte observations:
Most Republicans are Chicagoans except liberetarians like Ron Paul, Bob Barr and a few others that I'd call Miseans
Most Democrats are Keynesians but the party has been coopted by free marketeers. Clinton(s) fall in this category and maybe Obama (we'll find out). I don't think there are any Democrat Miseans.
CR is a reformed Chicagoan perhaps. Mostly I think he likes a good bar fight and we sure got one right now.
Congratulations Mr. Professor! For once they chose exactly the right man!
Too bad that the reward is only in dollars and not in real money, but I guess that even the honour is worth something for him.
Brilliant choice!
Invisible Hand,
With your moniker are you then a Smithian or is it in jest? I always joke Adam's invisible hand is just piking our pockets.
Supply siders love the "trickle down" rational. Did that really work. Hardly. The lions share went to the top 1%. Let the rest eat crumbs.
I would agree that the Austrian Miseans advocate free markets but object to the cronyism of our current variation. Unfortunately the Miseans are a tough love bunch that won't win many friends. I understand this but would vote for Ron Paul just to be contrarian. But if he really did get elected and forced this change it might be too scary.
So less scary and definately warm and fuzzy are the Keynesians. But all roads may (will) lead to ruin anyways. I think those that undertsand this prefer warm and fuzzy ruin. At least that's what I read into the goings on this weekend.
Gary writes: "I'm not sure which to savor more, the well earned award for my favorite economist (sorry CR you're a close second) or the schadenfreude from watching hundreds of bitter neocon heads explode!"
Gary is assuming that "neocons" consider the Nobel prize something of value. It has been devalued by the political bias of the committee for some years now. "Neocons" expect Nobel prizes to go to liberals in any field where politics possibly has influence, which certainly includes economics. The surprise would be if a conservative won one - then our heads might explode because we might have to consider that the prize committee isn't just playing politics. This is no surprise at all. The Nobel prize has become like the Sundance film festival, or Cannes, or the Oscars - just another forum for liberals to praise themselves.
So, sorry Gary, no heads are exploding. Just shaking sadly at what liberals have done - and will be doing - to once-respected institutions.
blackocktober, I think the "Miseans" (from what I understand of Misean's views - Sorry Misean if I get it wrong) are better framed in economic terms as being in the "Austrian" school. Austrian economists are the more old school "strict constructionalists" of the economics world. As such, they have a lot of appeal with the goldbug/anti-fiat currency types.
Austrian School - Wikipedia, the free encyclopedia
(Look at the links on the bottom for other schools)
That being said, there are less strict Austrians (i.e, in favor of fiat currency and stimulus packages, just that they should not inflate if possible and are paid for) and less liberal Keynesians (i.e., in favor of balancing budgets, re-privatizing banks and paying down debt once the recession/crisis is over and the economy righted).
I also think all major schools of economic thought have more than a point or two in their favor and that you'd be a fool to give over the economic tiller of a major economy to just a single economic viewpoint. The point is to be pragmatic and get the economy working in the fairest and most balanced manner for the most people. This is probably why Krugman gets labeled as an enlightened Keynesian, he's generally pragmatic and looks for fairness.
(--Warning, bad analogy--) In my view, as with the differing schools of marital arts and self-defense, in the end the point isn't who's the most orthodox in their form, it's defending yourself against the guy trying to wipe the floor with you in some unpleasant manner. You should also look to try to come out of the encounter in as much of one piece as possible.
In the middle of a fight is not the time to be arguing over ideology, the only questions should be effectiveness and, for economics/public policy, overall openness and fairness (the society coming out of the fight in one piece part).
Invisible Hand, blackoctober,
Is it not clear now that neo-cons excel at describing Keynes's (contra-cyclical) prescriptions as if pro-cyclical financing simulated real economy "recovery"? And that none of these neo-clowns is capable of prescribing, explicitly, fiscal or monetary policy to retire public debt from peak to trough?
Of course not. Volatility all capital markets sustains dependency on financing.
At this point, you must have noticed that the sector supports a variety of business models whose only revenue or solvency horizon is rolling over debt obligations to meet payroll.
Thanks Andrew and Mary,
I enjoy the philosophical arguements more than the technical aspects as that hurts my small brain. I know it is an oversimplification to draw strict lines and the world is grey. But it's more fun to pigeon hole however it bends the truth. In that regard here is another of my pigeon holing truth benders:
The Road to Ruin is paved with good intentions that get corrupted along the way. I believe we are headed for Ruin (this is when my wife leaves the room) Anyway lets break it down in my 3 ways:
Crony Ruin - Greenspan/Bush
Print money and help our friends out of their jamb (Paulson's original 3 page edict)
Warm and Fuzzy Ruin - Krugman/EU now US too
Print money so government can take control by nationalization or some form thereof
Tough Love Ruin - Ron Paul/Austrians
Do not print money and let them all fail
Anyway you look at it it's still Ruin. Oh Yee of Little Faith.
Mary or anyone else still out there,
I guess I like ruminating at the end of a thread. No one really cares as they have all moved on to the next big thing. But I like it here. Less self conscious over being a neophyte/nincompoop although I've been coming here off and on since last December so I feel a sort of membership/kinship but not one of the gang. Lots more still to learn. CR runs a great ship and it's only a matter time before he (and Tanta)make the big time. Although that will not be welcomed by the gang here. Already it seems that a lot of riff raff are showing up. I try to be polite and stay out of the fray. But now I may be going out on a limb by writing so much. Sure way to hang ones self.
Anyway, credit is really debt and we have too, too much of it. Mary refers to rolling it over. We have been doing this at at all levels of society and adding to it for too long. You can't just keep rolling it over, although the Financiers love that game, without at some point paying it back, can we? I don't think so. How do we pay of our debt? Not by creating more of it.
An opinion piece on Austrian trade cycle theory that Krugman had published in Slate ten years ago
(h/t Marginalrevolution)
The Hangover Theory - By Paul Krugman - Slate Magazine
I'm sure this will provoke some people here.
BlackOctober,
I picked my moniker because I'm a government economist and because the internet allows me to be invisibly safe from my politico bosses.
I also admire Adam Smith's insight into the market as an organizing solution. As a matter of public policy, I think the market solution should typically be the default policy, and that the burden of proof should be on anyone who wants a policy different from laissez-faire. That said, I believe there are plenty of times when the "Free Market" solution is not the ideal solution -- ie, Global Warming, Social Security, mandatory health insurance, energy independence, countervailing tariffs.
Many folks here do not like Krugman. I read the article and it is classic oppositional argument. But give Krugman his due. I believe he is a serious and honest about his view point as Ron Paul is about his. That is why I am torn between them. The Cronies however need to be behind bars.
Gelboak,
Thanks for the link. My first reaction is that Krugman probably would not like this article to be shown too widely, because it shows that he really hasn't read Von Mises carefully. Back when he was just a Keynesian professor it probably didn't matter much, but now that he's a Nobel Laureate he's supposed to know it all.
Gary is assuming that "neocons" consider the Nobel prize something of value. It has been devalued by the political bias of the committee for some years now.
Nonsense, it is the most respected prize in the world. Ridiculous attempts (OMG! It's biased!) to denigrate the prize devalue the writer far more than the Nobel.
Another perspective of mine from being here is that CR promotes a forum for Austrians and Keynesians to duke it out while both sides dump on the Cronies. Nice to have a place to gripe and come together but guess whoose still in control?
All they gotta do is get the market above 10K and stay there until after Nov 4th. What a pump today. It's not the PPT its the PTB silly. One heart beat and caribou barbie. Think about that. Ruin anyway you look at it
gelboak,
That article has been picked apart for its flaws several times by Austrians. Go to LewRockwell.com Blog and you will find the links.
The "Nobel" in Economics is pathetic. The prizes in the sciences are for finding out new facts about nature and make a permanent contribution to knowledge. If there are comparable achievements in economics, they come along once a decade or so. Also, it's funded by a bank, which is like having the Prize in Physiology or Medicine funded by a drug company.
Which is no criticism of Krugman. He's a good guy, clear thinker and has written some worthile books. My high opinion of him is totally objective and has nothing to do with the fact that I agree with his politics.
At least they didn't give it to a member of the Chicago "School", whose ideas have contributed so much to the current state of the world economy. It would be unkind to call it a cargo cult, because cargo cults are harmless delusions.
"But perhaps the time to have contempt for people who are right too soon has passed"
We'll know that to true when Chomsky gets his due.