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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Broken_Clock who wrote (924666)	3/6/2016 12:06:47 AM
From: i-node	1 Recommendation Recommended By one_less Read Replies (2) \| Respond to of 1575985

I think you got CJ on this one...

To: Broken_Clock who wrote (924666)	3/6/2016 3:05:53 AM
From: combjelly	Read Replies (2) \| Respond to of 1575985

Oh my. The von Mises Institute. Now there is a source known for their objectiveness and lack of spin... Oh wait. They aren't. Which is probably why they rely on quoting out of context and even editing quotes to say the opposite of what the author intended. All economists with any historical background knows the dangers of bubbles. And Krugman is certainly one of them. He has consistently warned about them in the past. Including the housing bubble. Now, let's look at the first selective quote. Here is an analysis by someone less devious. Krugman then wrote: "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." It should have been pretty evident that this was sarcastic. Later in the piece, Krugman derides Greenspan for failing to have taken steps to head off the stock bubble, explaining that Greenspan badly needed a recovery: "to avoid awkward questions about his own role in creating the stock market bubble." The last paragraph expresses Krugman's pessimism about the recovery's prospects: "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." cepr.net Here is another. If you read the read the entire column, Krugman was actually expressing skepticism that the Fed’s policies would have this result. He was saying that people were understating the odds of a “double dip” recession. But he didn’t say a double dip recession was inevitable. He said that if a double dip recession were to be avoided, the most likely mechanism would be the inflation of a housing bubble. As it happens, we didn’t get a double dip recession. Instead, we got soaring household spending driven by a housing bubble that replaced the NASDAQ bubble. The column, in other words, was completely correct. And it’s not as if Krugman never revisited the housing the bubble question between 2002 and the fall of 2008. It was precisely because he recognized, as early as 2002, that policy was aimed at producing a new round of bubble-led growth that he was able to see before most that there were major bubble-related risks to the economy. thinkprogress.org