"World Economy Stabilizing: Krugman".....

[BlooInBloo]

http://www.reuters.com/article/newsOne/idUSTRE54O20L20090525

"ABU DHABI (Reuters) - The world economy has avoided "utter catastrophe" and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.

"I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now," Krugman told a seminar.

"I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year.""


I can't wait to hear from Those Who Very Strongly Dislike Obama about how this is nevertheless very bad news.

[CoffeeCat]

1. I like Obama but that doesn't mean...

...that everything Krugman says is golden.

Before the collapse, Krugman repeatedly said that unemployment would not worsen, and he accused those
who suggested that we would have rising unemployment levels--of being wrong and negative.

The guy isn't always right.

[graywarrior]

2. No, he is not always right which is why I take what he says with a grain of salt....even this.

[CoffeeCat]

3. In my opinion...

...there's a lot of corporate-pushed, silver-lining bullshit out there.

There is some legitimate good news. However, there's so much statistic twisting
that is happening. For example, if housing prices are the lowest in 25 years--and
are continuing to fall--we see the headline, "Housing prices may be stabilizing".

Because housing prices fell at a slower rate between March and April---the
the story is spun in the most positive way possible--ignoring the reality.

And often, one factoid about the economy is blown up and positioned as evidence
that we're in recovery mode. Often, the factoid is true---but doesn't indicate
recovery as the author suggests--especially when all negative facts are totally
ignored, such as high unemployment, low housing values, additional housing foreclosures,
falling wages, frightened consumers who aren't borrowing or spending.

Yesterdays, "Consumer Confidence is Soaring!" articles were another farce. Yes, the media
did a bang up PR job of convincing people that things may turn around--by exaggerating
some statistics, hiding the bad stuff and constantly putting a positive spin on bad news.

Many people have been bamboozled by the PR campaign...so, what does that have to do with
the real economy?

This all may be an altruistic effort by corporations and others--to do anything they can to
keep the house of cards from falling. However, in the long run--if it does fall--keeping
American citizens in the dark (or confused with mixed messages) is not only unhelpful, but
it is harmful.


I'm so tired of the nonsense.

[mkultra]

9. we just spent a year and a half with ZERO positive economic indicators

Logic would dictate that the re-emergence of positive indicators points to something. If you feel that the US economy is a house of cards, which may not be to far off base, then you should recognize that many people DO want to support that structure. The question i would put to you is whether or economic structure is better than the only alternative. My answer is always going to be yes.

Going back to a bankless barter based trade system is going to be particularly hard on the poor.

[CoffeeCat]

18. When I said that our economy is a house of cards...

...I'm talking about it's current state. I like capitalism. I have no problem with our system, per se.

However, some things have simultaneously gone awry.

During the past twenty years, the aggregate demand for all goods and services has been artificially propped up
by credit card spending. This became rampant during the last 15 years. Demand was further propped by people
gaining easy money by pilfering their home equity. They used their homes as ATMs. This injected a ton of capital into
the economy--and fueled enormous growth.

These devices barely existed thirty years ago. People rarely used credit cards, and no one in their right mind
would have tapped into their home equity to use for expensive vacations, leather furniture or more Pottery Barn.
That's what people have done.

These behaviors provided a temporary bubble. Totally unsustainable.

That's the house of cards factor about which I'm speaking.

Obviously, there are additional factors that expanded this temporary bubble, and conversely, there are many things that
caused it to burst--besides credit cards and home-equity spending.

Seventy percent of our economy is consumer spending. We were good little spenders for a long time. Now a lot of that
is ending--and we have problems with bouncing back because of layoffs, outsourcing and our lack of a manufacturing base.

Right now--capitalism is undergoing some paradigm shifts. It is a house of cards right now--because the behavior
keeping our economy thriving for the past twenty years---was completely unsustainable.

[mkultra]

22. i see

well, most of this is true but i would say that both of the items you mention here are actually results of improper activities further up the pipe. Specifically speaking, the increased sell off of MSB and CDO products by the MAC/MAE as well as Bernanke jacking up the overnight lending rate.

those are the two factors that lead to this catastrophe. Now i realize that the entire event involved several factors and that our economy, due to over extended consumer spending, was at risk. In the end though, we got in that spot due to the bubble, which was cause by those two earlier events.

employment in the US is not 70% consumer spending related though as you can see by this chart;

[alcibiades_mystery]

4. It's called hedging your previous claims in order to avoid looking like a fool

Nobel Prize in Hemming and Hawing for Dr. Krugman.

[WeDidIt]

8. Doesn't that hemming and hawing get a different prize?

Like an Oscar, or maybe an Emmy?

[On the Road]

5. Glad to Hear Krugman Saying This

Of course things have stabilized, even thought it will be many months before it's accepted on DU. The administration's efforts proved to be successful.

Also, the next six month may be the best time to buy a house for years to come.

[PBS Poll-435]

6. Bwahahaha

Oh Paul...

:rofl:

[vaberella]

10. Stop PBS...

That was my first reaction and I ended up spitting up my drink.

:spray: :rofl:

[PBS Poll-435]

24. I hope it didn't end up on the monitor/keyboard

:evilgrin:


Seriously. Krugman would dread/delay/prevent the end of the world unless he was the first to break the news.

[mkultra]

7. The beauty of being an economist

is that you dont have to be right more than 50% of the time. All you really need to do is be able to recognize current trends and communicate their presence to the world.

In Krugmans case, he was able in the past to find a way to integrate certain trade ideas with standing models, and thus, garner a nobel.

He is a smart man, but that doesn't make him zoltar. Just because he can see whats happening, doesn't mean he can tell you how to fix it.

[w4rma]

11. Except he told us how to fix it and his method would have worked and worked much better. (nt)

[mkultra]

13. prove it.

[w4rma]

15. enact it. (nt)

[Occam Bandage]

16. That was a major part of the problem, from two fronts.

The first is that Krugman was proposing things that could not possibly make it through Congress. Obama's stimulus package only broke filibuster by one vote. Krugman just kept saying that Obama was a popular President and that he could do what he wants and Congress would rubber-stamp it. Given the GOP's willingness to filibuster anything and everything Obama proposes, I think Krugman has been emphatically proven wrong on that count.

The second is that Krugman doesn't have to deal with enacting policy. A columnist who avoids any position of responsibility (he preemptively declared he wanted no position in government as soon as Obama was elected) is not one whose word should be taken on authority. He's certainly entitled to make all the claims he'd like about how great his plan would be, but he makes them knowing his plan cannot and will not ever be tested. He knows he doesn't have to temper his plans with the caution, diligence, and careful planning that are required to prevent good ideas from being undone by unexpected real-world repercussions. As such, taking his suggestions as anything but pie-in-the-sky bullshitting is flawed. Take him as a gadfly; take him as a devil's advocate. Taking his pronouncements as anything but, though, is awarding him authority he does not deserve.

[mkultra]

17. not possible.

unlike krugman, Obama followed the successful models that have been laid out such as the Swedish bailout and avoided the pitfalls learned in the Japanese bailout. The end reality is that Obama used proven methods and insured, ill say that again for the flippant krugman fan boys, INSURED, that that we made it out. Which we have begun to do.

The final score?
Obama 1
Krugman 0


When peoples lives hang in the balance, success is all that matters and ideology can just sit down.

[w4rma]

19. Krugman advocated for the Swedish model and Obama enacted the Japanese one.

Notice how the same "too big to fail" banksters are still in operation, operating just like they did before the crash?

[mkultra]

21. actually, several are gone.

And when they get fully unwound, several more will be gone as well.

The swedish model required financial stimulus as well as private sector stimulus. This is the plan we followed. Obama specifically warned about the lost decade seen by the Japanese economy.

[BlooInBloo]

23. Like WaMu?

[depakid]

25. WaMu's actually a decent model for what ought to have been done

The branches are still there, in case you haven't noticed- they just have a different name and management team.

[BlooInBloo]

26. I.e., WaMu branches don't exist. Because there is no WaMu. There's Chase.

[depakid]

27. And there'd be something in place of BoA and the de-consolidated Citi group

[BlooInBloo]

28. And who's big enough to buy *all* of them?

[depakid]

29. They'd have been (and still may be) broken up- and sold off in bits

to more responsible outfits who didn't screw up (at least- not so bad as to bankrupt themselves and others).

[BlooInBloo]

34. Ok. So it's not at all similar to what happened to WaMu.

[Occam Bandage]

14. Know what's awesome about being a columnist with no responsibilities?

You can bash things, say there's no way they'll ever work, and that they're bound for failure, and when they work anyway, you can fall back on, "well...um...if I made a plan it would have worked much better." He reminds me of Friedman: When you predict success, failure means victory is just around the corner; when you predict failure, any success is deemed inadequate.

As for his plan? Krugman gave generalities, and attacked on generalities. You can't govern on generalities. If he wanted to "tell us how to fix it," he should have requested a position as an economic adviser. He didn't; he said he didn't have the temperament to work in government. Because, you see, in government you have to compromise from time to time (for the United States is not a dictatorship), and you have to watch the actual, real-world repercussions of your theories and your ideas, both intended and unintended.

For all his strident tone, I think he's something of a coward. Don't give me that "dissent is brave" business; that ain't the case for a columnist. Rancor drives sales, and his stock was never higher than when he was giving the MSM a high-profile example of a liberal attacking Obama's plan. That isn't bravery. Bravery is doing something that puts your own interests at risk. Admitting that his high-profile campaign against Obama's plan was mistaken (or at the least grossly exaggerated) would be brave. But of course, he doesn't admit when he's wrong, and he won't put himself in a position where reality could absolutely prove him right or wrong.

[Occam Bandage]

12. Huh. And why do you think the world avoided utter catastrophe, Paul?

Seems to me this problem originated in and was being sustained by the American financial sector. Seems to me that you were predicting worldwide economic catastrophe as a result. And it seems to me that you were predicting Obama's full-spectrum recovery plan would either have no impact or make things worse.

So, Paul...what happened?

[depakid]

20. Lat I heard, Obama wasn't the only leader -or policy maker in the world

But then, I tend to worry less about Obama "haters," and recognize that America doesn't exist in a vaccuum.

[Reterr]

30. But then, I tend to worry less about Obama "haters"

You don't want to reduce everything to the level an obnoxious and not particularly bright teenager would? What is wrong with you?

[Jakes Progress]

31. It sounds like someone has convinced

Paul that he needs to be more positive for the good of the country - you know - the old confidence helps the economy routine. I think he knows better.

On Wall Street, they are doing fine.
On Main Street, small businesses are suffering.
On Elm Street, people are busting their butts, crying into their pillows, giving up their dreams.

It used to be that you shouldn't trust anyone over thirty. Now you shouldn't think that anyone making over $300K has any idea what is really going on in the country.

If you're getting by, you are afraid of what might happen. You know several who are suffering, family members, neighbors, friends.

The only recovery is for the rich who caused the mess and are now profiting from it.

[BlooInBloo]

32. Ooooh - i LOVE the "it's all a rovian plot, and now THEY've gotten to him!" approach!

+5 points for creativity!

[Jakes Progress]

33. I guess you are right. Tulips are blooming.

The sky is an irresistible shade of azure blue. The birds sing so beautifully.

Golly. You're right. Everything is fine now. Silly people without jobs or health care to worry so much.

For the record, you're the one who finds rove here. I think it is a desperate, hail mary attempt to make things look okay. I think it is our guys making with the forced glee. Maybe where you are things are hunky dory and going up. I'm watching family and friends in very sad circumstances. Maybe your world is all better now. The people in the center where I volunteer have never seen it worse and it is damned hard to convince ourselves that there is a rosy time coming next week, month, year. Many of them don't have another month.

So forgive me if I rained on your parade. Many of us don't feel like tooting horns and dancing right now. But you go ahead. Pay no attention to the sad faces outside the window. They will just bum you out.