Remember when Paul Krugman called for a Housing Bubble in 2002?

[cthulu2016]

If you are a right-winger you probably "remember" it well, in that way one "remembers" things they wish had happened.



Did Krugman say that? Yes, in a NYT column in 2002. The quote is accurate. The following line was:

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off.

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html?src=pm

The 2002 column was about the Fed's difficulties in fighting a recession caused by the NASDAQ bubble bursting, and that since the NASDAQ bubble was unsustainable, that the only way to return to the same level would be another bubble, and that perhaps Alan Greenspan was trying to do just that.

"Greenspan needs to..." was what Greenspan "needed to do" to make his rosy predictions come true, not what he needed to do for the good of the nation of the health of the economy.

The comment by Pimco's Paul MCulley to which Krugman was referring was:

"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing."

http://www.nytimes.com/2005/05/27/opinion/27krugman.html?_r=1

Does that sound like someone saying a housing bubble would be a good idea?

This was two guys (Krugman and McCulley) theorizing, in 2002, that Alan Greenspan intended to replace the internet bubble with a housing bubble to keep the numbers up.

I wish I had predicted in 2002 that Greenspan thought he could get away with creating a housing bubble to replace the NASDAQ bubble. That's an impressive prediction.

But the quote appears on dozens or hundreds of RW web-sites as proof that Paul Krugman called for the creation of a housing bubble in 2002.

And Jonathan Swift called for eating Irish children. He did. I've seen the quotes!

[cthulu2016]

1. ...

[coalition_unwilling]

2. Typical RW 'spin' that stretches ingenuity far beyond its

natural limits.

Krugman meant that the Fed needed a housing bubble to keep a bubble economy afloat, not that the bubble economy was a good thing.

As usual, Repigs are relying on the functional illiteracy (and innumeracy) of the American people to promulgate their bullshit.

[JDPriestly]

3. Bush announced in a State of the Union speech his plan to make even poor Americans homeowners.

I recall that quite clearly. This is from Bush's State of the Union speech in 2002.

On October, 15, 2002, Bush announced a new national goal: "We have a problem here in America because fewer than half of the Hispanics and half the African Americans own their own home. That's a home ownership gap we've got to work together to close for the good of our country, for the sake of a more hopeful future. We've got to work to knock down the barriers that have created a home ownership gap. I set an ambitious goal: that by the end of this decade we'll increase the number of minority homeowners by at least 5.5 million families. And it's going to require a strong commitment from those of you involved in the housing industry."

By mid-2006, not yet four years after Bush's speech, minority home ownership had grown by 2.7 million, trumpeted the Weekly Standard, in "Closing the Gap: The Quiet Success of the Bush Administration's Push for Home Ownership."

Further, on this apparently Republican website:

Bush’s main proposals on housing:
Creation of an “American Dream Downpayment Fund” to allow low-income families to use HUD rental vouchers to make a down payment on a home. Bush says this could help as many as 650,000 families become homeowners.
A tax break aimed at real estate investors that would provide them with tax credits of up to 50% of costs, totaling $1.7 billion over five years. This tax credit would provide incentives for private investors to redevelop single-family housing or build new homes for low- and moderate-income Americans. Bush said he expects this plan would build or rehabilitate 100,000 homes in five years.
Individual development accounts giving tax credits and other financial incentives for low-income families to save money for a home purchase, for education costs, or to start a business.

Source: Washington Post, p. G5 , Oct 28, 2000

Housing: Use HUD rental vouchers for first home purchase
Creation of an “American Dream Downpayment Fund,” which would allow low-income families to use up to a year’s worth of HUD Section 8 rental vouchers to make a down payment on a home. “When a low-income family is qualified to buy a house but comes up short on the down payment, we will help them,” Bush said. “If they and the bank can come up with 25% of the down payment, the government will pay the rest, up to $1,500.” Section 8 vouchers can already be used to help with mortgage payments.
Source: Washington Post, p. G5 , Oct 28, 2000

http://www.ontheissues.org/celeb/George_W__Bush_Welfare_+_Poverty.htm

Sorry for quoting from a Republican source, but these are admissions of responsibility for the housing bubble in my view.