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Politics : View from the Center and Left
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To: JohnM who wrote (142255)8/9/2010 3:09:13 PM
From: Steve Lokness  Read Replies (1) of 542043
 
John;

On the internet issue

I shouldn't have even mentioned internet - but I was trying to turn the discussion back to the demand issue. The internet doesn't - shouldn't - have anything to do with this discussion on demand.

On Krugman and housing;
I couldn't disagree more. The housing crises didn't occur when pundits like Krugman finally saw it happening. The problem was instead caused by those like Greenspan - and krugman - who argued early on that an easy money policy was necessary. So through this urging, everyone got on board to party at the same time we went into war. Krugman did NOT argue we needed to pay for this war as we went. Here is a quote from a 2002;

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble..... AND .....But wishful thinking aside, I just don't understand the grounds for optimism. Who, exactly, is about to start spending a lot more? At this point it's a lot easier to tell a story about how the recovery will stall than about how it will speed up. And while I like movies with happy endings as much as the next guy, a movie isn't realistic unless the story line makes sense.

Well as we know we got just that spending that Krugman wanted by the fed. And what did that get us? It got us exactly to where we are today. Krugman got his way - we can now thank these guys for the debt that makes it nearly impossible to do today what Krugman wants..........again.

nytimes.com
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