krugman suggesting BP spill solution to recession

Mr Krugman’s crude Keynesianism underplays the link between firms’ and households’ behaviour and their expectations of future tax and spending policy. For example, firms across the rich world are hoarding cash. Their reluctance to invest may have more to do with regulatory, financial and fiscal uncertainty than weak consumer demand (see article). If governments address those worries, businesspeople may start spending.

http://www.economist.com/node/16485318

http://www.youtube.com/watch?v=XOYAuk809fY

I hope Louisiana sinks into the water and disappears.

wonderbra, if you want all your relatives to come live with you, wouldn't it be easier to just invite them?

Nial Ferguson rips Krugman

http://www.youtube.com/watch?v=_nRLiZrkHEY&feature=player_embedded#!

3:00 Nothing would scare the market more than if the government followed Paul Krugman’s call for more stimulus

I'm sorry, but I did not know that the govt. had an obligation to craft economic policy to Wall St.'s liking.

http://us1.institutionalriskanalytics.com/pub/iramain.asp

Consider New York Times columnist Paul Krugman for example. In yesterday's edition, Krugman takes Fed Chairman Ben Bernanke to task for not doing more to combat deflation. Krugman, who is a leading apologist for deficit spending under the tattered rubric of neo-Keynesian economics, thinks that the Fed should do more. And what should the Fed do according to Paul Krugman? Print more money. More quantitative easing via purchases of private debt is the urgent recommendation of this leading American economist.

While Krugman criticizes Ben Bernanke for being a Republican, it is worth reminding readers of The IRA that Krugman himself is not quite the socialist that he pretends to be. In fact, Krugman was once considered to be in the same political party as President Ronald Reagan and former House Speaker Newt Gingrich. Of note, the latter just declared himself a candidate for the presidency in 2012. Ponder a little gem from the upcoming book by IRA co-founder Christopher Whalen, "Inflated: How Money and Debt Built the American Dream":

"In a 1982 memo from Paul Krugman and Larry Summers, who were both then working in the Reagan Administration, to William Poole and Martin Feldstein, the two economists predicted that inflation would again begin to accelerate because the reduction in inflation engineered by the Fed was only temporary. But Summers, Krugman and many other liberal economists were wrong. In fact the rate squeeze by the Fed and a lot of positively coincident and mostly external trends quenched the fires of inflation in the US, but did not really instill fiscal sobriety. Paul Volcker was able to break the psychology of inflation and also take sufficient demand out of the economy to give the impression of price stability."

Instead of talking about ways to boost national income and create real employment, Krugman and his ilk simply call upon the Fed to print more money to boost short-term demand for goods, many of which are imported. By encouraging consumption without regard to the source of the goods, Krugman and his peers in the world's second oldest profession remain locked into the same mental framework and vocabulary that has governed the mainstream of American fiscal and monetary policy since WWII. This is unacceptable.

Economists such as Krugman do not seem to appreciate that all of the Fed's extraordinary efforts over the past two years to inject liquidity into the U.S. economy have had little impact outside of the financial sector. The suggestion by Krugman that the Fed do more of the same really is quite irrelevant to our current national predicament. Until we discard the bankrupt thinking about fiscal and trade deficits that have characterized the careers of people like Larry Summers and Paul Krugman for the past four decades, Americans will make no progress toward achieving real economic prosperity.

The lack of alignment between the current economic narrative within the U.S. and the underlying reality facing millions of Americans is not only blocking progress toward a true economic recovery, but is making it impossible for the U.S. to communicate much less cooperate with our allies and trading partners. When President Barrack Obama and Secretary of the Treasury Timothy Geithner wander around the globe preaching a gospel that consists of more debt and inflation, you can understand why they get a chilly reception.

Unlike Paul Krugman and Treasury Secretary Geithner, our trading partners around the world understand that competitiveness and fiscal balance are the real basis for national security. Since they cannot print money at will, the leaders of Germany and the UK are compelled to take the pain of addressing fiscal deficits immediately. But as the nations of Europe work through their problems, they will emerge stronger and more unified, and able to better compete in the global economy.

Americans need to build a new economic narrative, one that is based upon creating real jobs in the real economy and not upon subsidies for foreign exporters and mismanaged Wall Street banks. We need new economic thinkers who are not hobbled by devotion to the failed economic structures of the post-WWII world. Regaining control of the U.S. economy must start with a frank discussion with our trading partners and foreign creditors about jobs, the value of the dollar and what it will take to bring America's economy back into balance.

http://www.hussmanfunds.com/wmc/wmc100712.htm
There is little question that we have, for more than a decade, squandered our productive resources in the pursuit of bubbles. Almost unbelievably, real private gross domestic investment is lower today than it was 12 years ago, and much of the gross domestic investment that we have made in the interim has been destroyed in mispriced speculative activity such as residential construction and commercial real estate development.

If our only response to excess consumption is to pull out all the stops trying to "stimulate" consumption every time it falters; if our only response to reckless lending is to defend the bondholders every time their poor allocation of capital threatens to produce a loss for them, then quite simply, we will destroy our economy, our future, and our standard of living. The last thing I want to be is a cheerleader for the bears here. But quite honestly, it's difficult to envision a return to long-term saving, productive investment, and thoughtful allocation of capital until - as happens every two or three decades - the speculative elements of Wall Street are crushed to powder.