The Skyrocket’s Red Glare   [Edward John Craig]

Yesterday on the Corner, Stephen Spruiell paraphrased Paul Krugman's latest defense of the trade war that the Obama Energy Tax will most likely instigate:

Fresh off his thundering condemnation of "treason against the planet," Paul Krugman has a written a blog post on the subject of that trade provision in the Waxman-Markey cap-and-trade bill. Here's the shorter version of Krugman's argument:

The goal of Waxman-Markey is make the cheapest form of energy we have more expensive, consequently making everything produced in this country more expensive. It would defeat the purpose of this legislation to allow U.S. consumers to evade this energy tax by purchasing products from countries like China that choose not to adopt a similar tax. Therefore, it makes perfect sense to restrict Americans' access to products from these countries, and the president is wrong to oppose such restrictions. What about that don't you dumb hicks understand?

To which I reply: Please, please keep making this argument. As loudly as you can.

http://planetgore.nationalreview.com/

In his weekly column and recent New York Times Magazine story, “How Did Economists Get It So Wrong?” Paul Krugman blasts economic theory, argues against free markets and says that the country needs more taxpayer-funded “stimulus,” not less. He also faults economists for not predicting the crisis. In an essay on his web site, John H. Cochrane, finance professor at the University of Chicago Booth School of Business, wonders “How did Paul Krugman get it so wrong?” An excerpt:

It’s fun to say we didn’t see the crisis coming, but the central prediction of the efficient markets hypothesis is precisely that nobody can tell where markets are going — neither benevolent government bureaucrats, nor crafty hedge-fund managers, nor ivory-tower academics. This is probably the best-tested proposition in all the social sciences.

Paul Krugman writes as if the volatility of stock prices alone disproves market efficiency, and efficient marketers just ignored it all these years. But there is nothing about “efficiency” that promises “stability.” “Stable” growth would in fact be a major violation of efficiency.

Crying “bubble” is empty unless you have an operational procedure for identifying bubbles, distinguishing them from rationally low-risk premiums, and not crying wolf too many years in a row. Krugman rightly praises Robert Shiller for his warnings over many years that house prices might fall. But advice that we should listen to Shiller, because he got the last one right, is no more useful than previous advice from many quarters to listen to Alan Greenspan because he got several ones right. Following the last mystic oracle until he gets one wrong, then casting him aside, is not a good long-term strategy for identifying bubbles.

This difficulty is no surprise. No academic, bureaucrat or regulator will ever be able to fully explain market price movements. Nobody knows what “fundamental” value is. If anyone could tell what the price of tomatoes should be, let alone the price of Microsoft stock, communism would have worked.

Cont...

http://www.nypost.com/p/news/opinion/opedcolumnists/paul_krugman_makes_no_cents_oP5wBIigt2zIOWxlpdrQwL

Yes, I'm petty and vindictive... at least where pompous, keynesian fascists are concerned.

Paul Krugman Now Laughingstock On Two Continents

It's always the right time to ignore Paul Krugman, the New York Times columnist, Nobel Laureate and four-time Latin Grammy nominee whose drink-yourself-sober advice on handling the debt crisis is so sharply at odds with reality.

Of late, Krugman has had his Irish up at Europeans who are resisting the Obama Administration's plan to continue spending hundreds of billions on financial stimulus. (Not that he agrees with the administration, which Krugman has been arguing for the last 18 months should be spending trillions, not mere billions, on stimulus.) And in the case of Bundesbank president Axel Weber -- whom Krugman called out recently in the daily Handelsblatt for trying to shore up the falling euro at the expense of government job creation -- it's created a backlash. The Wall Street Journal reports that Krugman's criticism has turned him into the anti-Hasselhoff and boosted Weber's popularity as he pursues the top job at the European Central Bank:

Wolfgang Franz, who heads the German government’s economic advisory panel known as the Wise Men, tore into Krugman — and the US — in an op-ed in the German business daily Wednesday, titled “How about some facts, Mr. Krugman?”

“Where did the financial crisis begin? Which central bank conducted monetary policy that was too loose? Which country went down the wrong path of social policy by encouraging low income households to take on mortgage loans that they can never pay back? Who in the year 2000 weakened regulations limiting investment bank leverage ratios, let Lehman Brothers collapse in 2008 and thereby tipped world financial markets into chaos?” he wrote.

Unfortunately, as Krugman notes in his response, Franz managed to find the weakest arguments against the Times' fiscal shaman. Europeans have lost their appetite for digging deeper holes of debt for the same reason Americans have: because they don't have a choice. As Margaret Thatcher predicted would happen, we have all run out of other people's money. That reality explains a lot more than airy references to Germans' anti-inflationary mass psychology.

We're at the tail end of the largest economic intervention since World War II, and even on its own narrow, nebulous terms, it has been a colossal failure. The failure is obvious to working people. It's obvious to unemployed people. It's obvious to kindergarteners, to dogs and cats. Only Paul Krugman persists in thinking good things will happen if we just throw more money on the barbecue.

http://reason.com/blog#article_142154

Economic Policy: Nobel Prize-winning economist Paul Krugman says the U.S. is in the "early stages of a third Great Depression." If he's right, it's only because American policymakers have been following his advice.

cont...

http://www.realclearmarkets.com/articles/2010/06/29/paul_krugmans_depression_98545.html

people like krugman are a part of the problems today.. his economics seem to reflect  his political position as opposed to whats going to work for the economy... this is the reason that he is now a laughing stock... peopkle have seen his political/economic advice and how bad it really is.... the the backpeddaling he is trying to do to stay relevant...


economics.. numbers.. are above political rhetoric... the numbers never lie...


see ya
cathy : )

I did not like the Reagan era.  I worked full-time and was as poor as a church mouse. 

Well, I kind of liked that era.  As I probably earned more during those eight years (plus 1989 and 1990) than I will have earned total during the other 35 or so years of my working years.  But then that was just me.  We each have our own unique experiences. 

In a July 14, 2008, op-ed in the New York Times, Krugman explained why Fannie and Freddie were blameless thus:

Partly that’s because regulators, responding to accounting scandals at the companies, placed temporary restraints on both Fannie and Freddie that curtailed their lending just as housing prices were really taking off. Also, they didn’t do any subprime lending, because they can’t: the definition of a subprime loan is precisely a loan that doesn’t meet the requirement, imposed by law, that Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income. So whatever bad incentives the implicit federal guarantee creates have been offset by the fact that Fannie and Freddie were and are tightly regulated with regard to the risks they can take. You could say that the Fannie-Freddie experience shows that regulation works. [emphasis mine]

Critics were quick to point out that Krugman had his facts wrong.¹ As Charles Calomiris and Peter Wallison of the American Enterprise Institute (Wallison is also a member of the financial crisis inquiry commission) explained, “Here Krugman demonstrates confusion about the law (which did not prohibit subprime lending by the GSEs), misunderstands the regulatory regime under which they operated (which did not have the capacity to control their risk-taking), and mismeasures their actual subprime exposures (which he wrongly states were zero).”

So, Krugman shifted his emphasis. In his blog critique of a Financial Times op-ed I wrote in June 2010, Krugman no longer argued that Fannie and Freddie could not buy subprime mortgages. Instead, he emphasized the slightly falling share of Fannie and Freddie’s residential mortgage securitizations in the years 2004 to 2006 as the reason they were not responsible. Here again he presents a misleading picture. Not only did Fannie and Freddie purchase whole subprime loans that were not securitized (and thus not counted in its share of securitizations), they also bought substantial amounts of private-label mortgage-backed securities issued by others.² When taking these into account, Fannie and Freddie’s share of the subprime market financing did increase even in those years.

Of course, one could question this form of analysis. Asset prices and bubbles have momentum. Even if Fannie and Freddie had simply ignited the process, and not fueled it in the go-go years of 2004–2006, they would bear some responsibility. Krugman never considers this possibility.

In the current review piece, Krugman first quotes Crisis Economics: A Crash Course in the Future of Finance, by Nouriel Roubini and Stephen Mihm :

The huge growth in the subprime market was primarily underwritten not by Fannie Mae and Freddie Mac but by private mortgage lenders like Countrywide. Moreover, the Community Reinvestment Act long predates the housing bubble… Overblown claims that Fannie Mae and Freddie Mac single-handedly caused the subprime crisis are just plain wrong.³

Clearly, Fannie and Freddie did not originate subprime mortgages directly—they are not equipped to do so. But they fueled the boom by buying or guaranteeing them. Indeed, Countrywide was one of their largest originators of subprime mortgages, according to work by Ed Pinto, a former chief credit officer of Fannie Mae,⁴ and participated from very early on in Fannie Mae’s drive into affordable housing.

For instance, consider this press release from 1992:

Countrywide Funding Corporation and the Federal National Mortgage Association (Fannie Mae) announced today that they have signed a record commitment to finance $8 billion in home mortgages. Fannie Mae said the agreement is the single largest commitment in its history… The $8 billion agreement includes a previously announced $1.25 billion of a variety of Fannie Mae's affordable home mortgages, including reduced down payment loans…

"We are delighted to participate in this historic event, and we are particularly proud that a substantial portion of the $8 billion commitment will directly benefit lower income Americans," said Countrywide President Angelo Mozilo… "We look forward to the rapid fulfillment of this commitment so that Countrywide can sign another record-breaking agreement with Fannie Mae," Mozilo said.

"Countrywide's commitment will provide home financing for tens of thousands of home buyers, ranging from lower income Americans buying their first home to middle-income homeowners refinancing their mortgage at today's lower rates," said John H. Fulford, senior vice president in charge of Fannie Mae's Western Regional Office located here.

Of course, as Fannie and Freddie bought the garbage loans that lenders like Countrywide originated, they helped fuel the decline in lending standards. Also, while the Community Reinvestment Act was enacted in 1979, it was the more vigorous enforcement of the provisions of the Act in the early 1990s that gave the government a lever to push its low-income lending objectives, a fact the Department of Housing and Urban Development was once proud of (see the HUD press releases below).

cont...  Paul Krugman: Many Are the Errors - Raghuram Rajan, The American

Krugman is nothing if not consistant in his idiocy.  krugman is worse than merely a bad economist... he is a snake oil salesman.

 and he is in league with the Chief Snake Oil Salesman....  positively astounding that this government could have monetary idiots writing finance laws that are going to hamstring this country into the next century---if we last that long. 

Right on!  Dr. Williams reams paul krugman!  About damned time.

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The nation's elite and the news media see being against the Obama-led agenda as being racist, homophobic, xenophobic, Islamaphobic, mean-spirited and insensitive. Paul Krugman, columnist for The New York Times, has a different twist expressed in "It's Witch-Hunt Season" (8/29/10). Krugman says that the last time a Democrat sat in the White House, Bill Clinton, he faced a witch-hunt by his political opponents. "Now," Krugman says, "it's happening again -- except that this time it's even worse," asking, "So where is this rage coming from? Why is it flourishing? What will it do to America?"

Professor Krugman and others among America's elite blame some of the rage on talk-show hosts such as Rush Limbaugh, Glenn Beck and Sean Hannity. They are only partially correct. What talk shows have accomplished is they've ended the isolation of many ordinary Americans. When the liberal mainstream media dominated the airwaves, Americans who were against race and sex quotas were made to feel as though they were racists and sexists. Americans who were against big government were portrayed as mean-spirited and uncaring. What talk radio and the massive expansion in non-traditional media have done is not only end the isolation, but more important, the silence amongst ordinary Americans.

Krugman says that what we're witnessing is "political craziness." Therefore, the overwhelming majority of Americans who think our borders ought to be secure and think we should have the right to determine who enters our country are politically crazy. Americans who can find nothing in the U.S. Constitution granting Congress the power to take over our health care system are politically crazy. Americans who think a mosque should not be built in the shadows of the Muslim-destroyed World Trade Center are simply religious bigots. By the way, those who oppose the building are not saying there's no legal or constitutional right to do so any more than they would say a person has no legal or constitutional right to curse his parents, but neither is a good idea. In Thomas Sowell's column on the topic (8/31/10), he reminds us that "If we all did everything that we have a legal right to do, we could not even survive as individuals, much less as a society."

Krugman predicts that political craziness, and by inference crazy Americans, will result in a Republican takeover of the House of Representatives and play chicken with the federal budget. Chicken with the budget is precisely what Defundit.org has called for. Already they've obtained the pledges of 165 congressional candidates not to fund any part of Obamacare.

While America's liberal elite have not reached the depths of tyrants such as Lenin, Stalin, Mao and Hitler, they share a common vision and, as such, differ only in degree but not kind. Both denounce free markets and voluntary exchange. They are for control and coercion by the state. They believe they have superior wisdom to the masses and they have been ordained to forcibly impose that wisdom on the rest of us. They, like any other tyrant, have what they see as good reasons for restricting the freedom of others.

Their agenda calls for the elimination or attenuation of the market. Why? Free markets imply voluntary exchange. Tyrants do not trust that people behaving voluntarily will do what the tyrants think they should do. Therefore, they seek to replace the market with economic planning control and regulation.
http://econfaculty.gmu.edu/wew/articles/10/LiberalCrackup.htm

Maybe you should have got a better job.

deregulation was and is the problem. deregulation allows bubbles to get bigger to create more of a mess.

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As for the CFMA, Kevin D. Williamson and I have written in these pages that institutions buying credit-default insurance should be required to have a real insurable interest at stake. As it stands, an institution can buy insurance on a bond it doesn’t even own. That said, losses on credit-default swaps have been smaller than expected, because so many transactions are “netted” — institutions buy credit protection and then sell it at a higher price, so their exposure is hedged. When Lehman Brothers declared bankruptcy, institutions that sold credit protection on Lehman bonds were projected to lose as much as $400 billion. After all the transactions cleared, though, sellers had lost only $6 billion on their Lehman trades. AIG’s portfolio of credit-default swaps presented a bigger problem, as the mortgage-backed assets they insured started to sour.

http://nrd.nationalreview.com/article/?q=ZjJhNzUxNTZhYTA0MDA4M2E3ZjZmMGMzMzk2NDgzNjY=
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Lets tell the whole story. AIG didn't collect enough in premiums to honor its commitment. Not only that but they didn't have nearly enough capital in reserve to cover even a modest bubble burst. AIG got bailout money to pay off the claim from Goldman Sachs which was at full parity. Normally when insurance companies can't cover all claims,  their clients may collect ten cents on the dollar.

The financial industry is one of the most heavily regulated industries in America, Knightly.  It was never deregulated... I do wish you would understand that.

 

what regulation? you heard of the saving and loan scandal decades back, that was the result of deregulation. only recently were investment banks and commercial banks were allowed to merge. investment banks are not allowed to accept deposits. that is they aren't covered by fdic. the merger allows the investment banks to get hold of deposits of commercial banks. thus will be able to create bigger bubbles.

maybe she tried but couldn't find one. positive results don't always following looking. if you had thought of that, you would save on some keystrokes.

I was a young man in the Reagan era. Started out with not much and shitty jobs, kept looking for better and found it. It's called "motivation" and "self-determination."

Maybe you should have thought about that, saved yourself some keystrokes.

why would you want such personal info from a member here? are you planing some identity theft thingy?

 funny but true. i have been robbed a few times. they didn't get much. it would be more profitable robbing the rich instead of me.

Paul Krugman Finally Flips His Lid - Russ Smith, Splice Today

As should be obvious, I have a deep and abiding loathing of paul krugman and is keynesian fascism.  Between him, obama and algore, the nobel prize has never been so badly corroded.

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In other kicking-Krugman news, Steven Horwitz in The Freeman on Krugman's call: "Let's Have a War! We could all use the money!"

Spending trillions of dollars fighting a war can certainly bring idle capital and labor into employment, driving up GDP and lowering unemployment. But this does not mean we are any wealthier than before.

Wealth increases when people are able to engage in exchanges they believe will be mutually beneficial. The production of new goods that consumers wish to purchase is the beginning of this process. When instead we borrow from future generations to spend on goods and services connected not to the desires of consumers, but rather to the desire of the politically powerful to rain death and destruction on other parts of the world, we are not allowing individuals the freedom to do the things they think will make themselves better off. And we are certainly not extending that freedom to those killed in the name of our economy-enhancing war....

Employing people to dig holes and fill them up again, or to build bombs that will blow up Iraqis, will certainly reduce unemployment and increase GDP, but it won’t increase wealth. The problem of economics is the problem of coordinating producers and consumers. This coordination happens when we produce what consumers want using the least valuable resources possible. That is why it is wealth-enhancing to dig a canal using earth-movers with a few drivers rather than millions of people using spoons, even though the latter would generate more jobs.

Sending soldiers off to war is a waste of human and material resources, and is almost by definition wealth-destroying, no matter what it does to GDP or unemployment rates. The only way one can view economics amorally, as Krugman wishes to, is if one is only concerned with total GDP and not its composition. However, it is the composition of GDP, in the sense of how well what we’ve produced matches consumer wants, that ultimately matters for human well-being.
http://reason.com/blog#article_146254

Within hours of the Gabrielle Giffords shooting, lunatic “economist” Paul Krugman raced to put up a blog post blaming Sarah Palin and the Tea Party for the attack.  “For those wondering why a Blue Dog Democrat, the kind Republicans might be able to work with, might be a target,” said Krugman, “the answer is that she’s a Democrat who survived what was otherwise a GOP sweep in Arizona, precisely because the Republicans nominated a Tea Party activist. (Her father says that ‘the whole Tea Party’ was her enemy.) And yes, she was on Sarah Palin’s infamous ‘crosshairs’ list.”

Somehow the New York Times left Krugman on the payroll after this disgusting example of mindless idiocy, and he’s decided to double down, expanding on his deep thoughts at greater length in an op-ed called “Climate of Hate.”  With the publication of this editorial, the New York Times hits absolute rock bottom.  Not only is it slanderous, and easily fisked by a six-year-old with a dial-up connection to Google, but it’s a perfect example of someone very deliberately trying to create a “climate of hate.”

http://www.humanevents.com/article.php?id=41087

You know... krugman really is a piece of human garbage.  It's amazing to me that he can sleep at night.

 That he is.... that he is.

he is truly an abhorant human being... and then you see who publishes his crap.. and there  you go... disgusting people...