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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (60827)5/26/1999 6:14:00 PM
From: Cynic 2005  Read Replies (2) of 132070
 
Mike, not to drag this subject but here is a point I wanted to make for a long time. In late Aug or Sept 98 NPR's Market Place interviwed Krugman and a Forbes writer (forgot her name - I think Susan, if Magner or AR or any one else heard the segment, please post.) Susan was very upfront in telling that this is a bubble created by excess credit and let us act tough now and get a recession over with rather than loosen now and invite depression later. Krugman flip-flopped in that 2 minute segment it self. First he said that Fed's easy money policies are the real cause of the problem we have at hand (market was tanking every day at that time.) A little later he said lowering rates might do the trick of propping the markets. I don't remember exactly what he said, but this is what I remember.

His early August comments at a luncheon in Cambridge were really tough on Greenspan. He calimed to have said to Greeny to raise rate way back in 96. He then said that stock market bubble might pop. A little while later, the stocks took a swoon. On that day our very own Joseph G called it "Krugman break" (akin to Bernard B's 1929 break while he was giving a speech) Most of us on the Myth/Mohan thread even thought Krugman is really serious and knows what he is talking about. Later we came to know he is much too flip-flopping to be any credible.

BTW, as with capital controls, he literally cried when Malaysia imposed them. I believe he was critical about India's capital controls as well. The fact of the matter is, (as I believe) when hot money is chasing hot returns around the world, the less developed nations like Malaysia and India are better off imposing capital controls. That is than play in to the whims and fancies of the stronger fiat money backed hot money seekers.
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