Krugman in 2002: You Know What We Need? A Housing Bubble
That’s what he said:
The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. 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.
Judging by Mr. Greenspan’s remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman’s crystal ball has been cloudy lately . . .
You gotta hate those cloudy crystal balls . . .
Via Instapundit.
My crystal ball:
The financial regulation scheme being proposed by the Administration will result in our looking back wistfully at Japan’s Lost Decade as a period of robust economic activity.
If you think poverty/deprivation is a problem now, wait until we’ve undergone a decade or more of negative growth, with expanding government regulation into all areas of the economy and personal conduct.
AD - RtR/OS! (f52b58) — 6/17/2009 @ 7:40 amIf the Obama administration keeps printing money, Krugman may get his wish.
Brother Bradley J. Fikes, C.O.R. (0ea407) — 6/17/2009 @ 7:47 amThe sage of former Enron advisors always knows what he’s talking about.
Dmac (f7884d) — 6/17/2009 @ 7:51 amBrother Bradley, “May” get his wish? I’d suspect it’s in the mail so to speak.
Krugman has a history of saying we are headed for trouble, in fact, he’s been saying that for the better part of a decade. He finally is right, but only because Uncle Sam re-connected the power supply to the printing presses and our great grand kids will be paying the tab.
GM Roper (85dcd7) — 6/17/2009 @ 7:55 amDmac – Krugman & the NY Times never did figure out why it was so hypocritical of Krugman to blame every Republican under the sun for Enron, except himself.
JD (50d704) — 6/17/2009 @ 7:57 amMethinks that Krugman needs this rubbed in his face a bit…
Maybe then he’ll quit yelling, Booooosh!, Boooooosh!, like all the other Obama-nauts whenever the economy is brought up…
Effin’ palavering pulitzer prize putzdom…
Bob (99fc1b) — 6/17/2009 @ 8:07 amThe Obama administration is creating a Government bubble to replace the Economic Success bubble.
Apogee (e2dc9b) — 6/17/2009 @ 8:12 amPatterico, one of your commenters mentioned this Krugman quote in the Financial Regulations thread yesterday, before Instapundit had it.
Official Internet Data Office (eb7e58) — 6/17/2009 @ 8:28 amKrugman in 2002: You Know What We Need? A Housing Bubble
poon (bc36de) — 6/17/2009 @ 8:34 amActually somebody called Paul McCulley of Pimco said it.
Still nothing about Ensign? Is it just that you do not want to give the trolls (or the “trolls”) the satisfaction of crowing about such a thing on your site? I understand that, I suppose. I also understand that you, DRJ, and Karl are busy people, but if some ill-considered remark by Paul Krugman warrants a post, I would think the resignation of the head of the Senate Republican Policy Committee certainly does as well…
[I read about his affair last night but I didn’t realize he resigned. Thanks for the tip. I’ll try to post something later today. — DRJ]
Leviticus (20b7ac) — 6/17/2009 @ 11:28 amWhat did he do, Leviticus?
JD (50d704) — 6/17/2009 @ 11:42 amThe Obama administration is creating a Government Failure bubble to replace the Economic Success bubble.
Comment by Apogee — 6/17/2009 @ 8:12 am
Fixed that for you.
AD - RtR/OS! (65f6c2) — 6/17/2009 @ 5:19 pmJohn Ensign has had the temerity to conduct himself like a Democrat, and think he can get away with it.
AD - RtR/OS! (65f6c2) — 6/17/2009 @ 5:20 pmEnsign resigned his position as Chrmn of the Policy Cmte (#4 in GOP Sen heirarchy), but has not stepped down from the Senate.
AD - RtR/OS! (65f6c2) — 6/17/2009 @ 5:21 pmHe had an affair with a staffer, is that right? What do you think he should do, Leviticus?
JD (dab43d) — 6/17/2009 @ 5:37 pmI don’t care what he does. I just think it’s noteworthy.
Leviticus (20b7ac) — 6/17/2009 @ 6:26 pmFor a politician? Meh. This would not even make Barney Frank’s resume.
JD (dab43d) — 6/17/2009 @ 6:42 pmEveryone is loving to read this line, but few noticing how prophetic it was. The housing bubble did indeed stave off the recession of the nasdaq bubble.
imdw (6d9df6) — 6/17/2009 @ 7:14 pmGuys, if you read what Krugman said carefully you’ll see he wasn’t endorsing the housing bubble – just predicting that it would be necessary in order to perpetuate demand rather than sucking up the downturn.
Huh (6ad945) — 6/17/2009 @ 9:41 pmKrugman is the prophet and Teh One is a Messiah !
JD (dab43d) — 6/17/2009 @ 9:45 pmKrugman endorsed the housing bubble as a solution to the collapse of the NASDAQ bubble. We know how badly that turned out. Today, he’s calling for an even bigger stimulus package as a solution to the collapse of the housing bubble–one that’s 50% bigger than the $800 billion stimulus passed.
Since all of that is borrowed money, Krugman is arguing for the creation of a huge new government debt bubble. However, all bubbles eventually collapse, and the bigger they are, the worse the repercussions.
But that’s all that Keynesian economists like Krugman know–debt, debt, and more debt–and they don’t think that debt has to be repaid, just rolled over. They forget that there’s this little problem called “interest.”
Official Internet Data Office (861c3a) — 6/18/2009 @ 8:39 am“Krugman endorsed the housing bubble as a solution to the collapse of the NASDAQ bubble.”
Calling something a bubble isn’t really an endorsement.
imdw (ff46ff) — 6/18/2009 @ 5:52 pm