Decourcy on Krugman

I am happy to present the latest in a series of guest contributions to Blawgconomics. Today, repeat contributor Patrick Decourcy presents a point by point analysis of Paul Krugman's recent op-ed piece in the New York Times on the state of the economy. Though we are not often keen to go toe-to-toe with Nobel laureates (despite being realistic about how much they would care), and though the very careful reader will likely note a particular tone to his analysis, I do feel that Pat was able to highlight a few holes in Krugman's article. This is particularly true in regards to stimulus and interest rates, topics which have been discussed on this page in the past. If anyone disagrees (particularly anyone quoted below with a Nobel Prize), Blawgconomics would appreciate their comments and responses. Without further ado, and in all of its unedited glory, I give you Mr. DeCourcy:

Paul Krugman is a left wing partisan democrat hack. To even refer to him as an "economist" damages the credibility of the science. His recent article again proves his partisanship and Obama cult worship will supersede any scientific analysis of the economic situation in this country. Here are my quote by quote responses to this Nobel Laureate’s recent op/ed:

"To be sure, “centrists” in the Senate have hobbled efforts to rescue the economy."

How so exactly? By standing up for some potential fiscal restraint in regards to a needless health care reform package after approving trillions of new spending on a stimulus that only 15% has been spent? Or the $700 billion TARP? Or the GM, AIG, Chrysler, Citi bailouts? How exactly have these centrists hobbled these efforts?

"President Obama and his inner circle have been intimidated by scare stories from Wall Street."

Intimidated? This moron forgets there is a pay czar regulating the salaries of Wall Street! If anyone is being intimidated its Wall Street, not the White House.

"Consider the contrast between what Mr. Obama’s advisers were saying on the eve of his inauguration, and what he himself is saying now."

Notice how Dr. Krugman tells us to contrast Mr. Obama's advisers, and not Mr. Obama himself. Did we see statements that Bush’s advisers told him to invade Iraq, or Bush’s advisers told him to do a flyover of Hurricane Katrina? No we didn’t. This is a nice little left-wing media trick to help throw the advisers under the bus as the economy worsens - rather than Mr. Obama - who knows nothing about the economy. And why should he - community organizers and former ACORN lawyers usually don't study capitalism since they are concerned with gaming the free market by loudly protesting banks (brandishing them racist) when they didn't want to give people with poor credit home loans....we saw how that worked out! How’s that hope and change and other centrist campaign platitudes working out for all of you Obama voters?

"In December 2008 Lawrence Summers, soon to become the administration’s highest-ranking economist, called for decisive action. “Many experts,” he warned, “believe that unemployment could reach 10 percent by the end of next year.” In the face of that prospect, he continued, “doing too little poses a greater threat than doing too much.”

"Ten months later unemployment reached 10.2 percent, suggesting that despite his warning the administration hadn’t done enough to create jobs. You might have expected, then, a determination to do more."

What more could be done? Obama spent trillions and bailed out numerous large-cap corporations while ballooning the deficit to unheard of levels? Now he is trying to spend trillions more on a health care plan which is unpopular and will not improve health care. Couldn't someone argue we have done too much and now its time for big govt to get the hell out of the economy? Of course, always the partisan hack, Krugman argues for more deficit spending, tax increases on the rich, and stimulus. Sounds like the DNC platform to me, not the analysis of an award winning economist.



"But in a recent interview with Fox News, the president sounded diffident and nervous about his economic policy. He spoke vaguely about possible tax incentives for job creation. But “it is important though to recognize,” he went on, “that if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.”

What? Huh?

"Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts: the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence."

This part is just comical. Obama actually makes a salient point on the ballooning debt and Krugman is miffed! Then Krugman cites these phantom economists - whom he doesn't name – claiming they have told him the govt needs to be spending more? Who is claiming this outside of Krugman? I’ve seen Steve Moore, Larry Kudlow, Lou Dobbs, Tom Sowell, Walter Williams, Steve Forbes, Art Laffer, and many other economists claiming this sort of government intervention in the economy and deficit spending is way out of hand and needs to be reigned in and combined with spending and tax cuts to get the economy back on track. None are calling for more stimulus - except for Krugman and the farthest left wing zealots of the Democrat Party.

"Now, it’s politically difficult for the Obama administration to enact a full-scale second stimulus. Still, he should be trying to push through as much aid to the economy as possible. And remember, Mr. Obama has the bully pulpit; it’s his job to persuade America to do what needs to be done."

"Instead, however, Mr. Obama is lending his voice to those who say that we can’t create more jobs. And a report on Politico.com suggests that deficit reduction, not job creation, will be the centerpiece of his first State of the Union address. What happened?"

"It took me a while to puzzle this out. But the concerns Mr. Obama expressed become comprehensible if you suppose that he’s getting his views, directly or indirectly, from Wall Street."

This guy is incredible. Obama is being controlled by Wall Street?!?!? Again, they have a pay czar!!!! A pay czar controlling their sources of income! What leverage does Wall Street have? Groups linked to Obama and the DNC picketed at the house of AIG execs after the bailout!

How about dwindling poll numbers and massive governorship losses in NJ and VA have caused Obama to rethink his far-left message. Doesn’t mean he will all of a sudden promote free market and conservative principles as a matter of policy, I am not suggesting this. But I am saying he will talk more in centrist campaign speak trying to convince squishy independents that he really isn't as radical Marxist as his policies indicate. Didn't take me too long to puzzle that out!

"Ever since the Great Recession began economic analysts at some (not all) major Wall Street firms have warned that efforts to fight the slump will produce even worse economic evils. In particular, they say, never mind the current ability of the U.S. government to borrow long term at remarkably low interest rates — any day now, budget deficits will lead to a collapse in investor confidence, and rates will soar.


And it’s this latter claim that Mr. Obama echoed in that Fox News interview. Is he right to be worried?


Well, spikes in long-term interest rates have happened in the past, most famously in 1994. But in 1994 the U.S. economy was adding 300,000 jobs a month, and the Fed was steadily raising short-term rates. It’s hard to see why anything similar should happen now, with the economy still bleeding jobs and the Fed showing no desire to raise rates anytime soon."

Why would the Fed raise rates soon, hmmmm lets see, maybe you should read your own damn rag of a newspaper (although it does make good toilet paper especially when this pseudo-scientist analyzes the economy). NYT headlines: Wave of Debt Payments Facing U.S. Government http://www.nytimes.com/2009/11/23/business/23rates.html. One quote from that article: "The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true. But that happy situation, aided by ultra low interest rates, may not last much longer." So which is it, Krugman - the NYT Business news Page or your analysis?

"A better model, I’d argue, is Japan in the 1990s, which ran persistent large budget deficits, but also had a persistently depressed economy — and saw long-term interest rates fall almost steadily. There’s a good chance that officials are being terrorized by a phantom menace — a threat that exists only in their minds.


And shouldn’t we consider the source? As far as I can tell, the analysts now warning about soaring interest rates tend to be the same people who insisted, months after the Great Recession began, that the biggest threat facing the economy was inflation. And let’s not forget that Wall Street — which somehow failed to recognize the biggest housing bubble in history — has a less than stellar record at predicting market behavior."

The Japan comparison is nebulous, at best. Completely different factors were at play in the current US recession and the Japanese one during the 1990s. Krugman apparently didn't read any of the economists who argue that FDR's govt intervention actually hampered the US economy and elongated the depression. Seriously check this out http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx , you wont hear about this stuff from dishonest and Democrat operative Keynesians like Krugman.

"Still, let’s grant that there is some risk that doing more about double-digit unemployment would undermine confidence in the bond markets. This risk must be set against the certainty of mass suffering if we don’t do more — and the possibility, as I said, of a collapse of confidence among ordinary workers and businesses.
And Mr. Summers was right the first time: in the face of the greatest economic catastrophe since the Great Depression, it’s much riskier to do too little than it is to do too much. It’s sad, and unfortunate, that the administration appears to have lost sight of that truth."


See with the liberals and socialists, its always the intent of the policies that is supposed to matter. Not the results. A guy like Krugman says there is “risk” in undermining bond markets, but the “risk” is offset by trying to help working folks by doing more of the same which hasn’t worked at all. The stimulus has done zilch - except put us into massive debt and yield sovereignty to the Chinese. I am all for foreign investments in America but can anyone argue that the amount of debt China owns isn't a potential natl. security risk.

What more can the govt do? Krugman doesn't define - he just claims more must be done. Well, like what?

This article was one of the worst economic analysis articles I've ever read. The fact that it came from a Nobel Laureate isn't surprising to me, as this award is nothing more than a politicized joke (with the exception of the medicine award). Since Yasser Arafat (one of the pioneers of the incredibly peaceful technique called "suicide bombing") won the Nobel peace award it has lost significant credibility in my mind. This loss of credibility has increased with Obama winning the peace prize and Jimmy Carter as well. It now appears that economists like Krugman - who promote Marxist and socialist solutions to everything - are the new economic elite in the eyes of the Nobel Committee on Economics, and that's a shame because those policies don’t work and have never worked and have led to misery and the loss of freedom and liberty.