Krugman(2002) housing bubble IS THE cure

So which side of this discussion do you think Krugman is on? When answering, do yourself a favor and don't be like the drooling morons over on the Zero Hedge blog (where you presumably found this link) who think that this column was arguing in favor of a housing bubble as economic stimulus. The article is dripping with sarcasm and with disapproval of the conduct of both the Greenspan Fed and the administration. The best reading - in fact the only sensible reading - is as a prescient warning of the trouble that four more years of housing bubble (and now four years of bust) would bring if Greenspan was left to continue running wild, as of course he was.

Boy you are dense riversider.

Rachmann in the F.T. has a nice piece about Krugman. Even a cat can look at a king.

Correct title for the thread would have been "Krugman(2002): The nutjobs in the White House and that maniac Greenspan who does their bidding think that the housing bubble is the cure"

I got sucked into this too..yep, from ZH which does have a crazy following. Look, I dont blame the housing bubble on krugman nor do I even think he agreed with the call to create one. But lets face it, Krugman is about aggressive stimulus and especially, aggressive monetary policy when we are in slumps. He did in fact call for a stimulation of the housing sector in other interviews at this time, so I dont think the sarcasm in that 2002 piece was so blatant.

Now, in 2001 he did say clearly on Moneyline:

http://www.pkarchive.org/economy/ML071801.html

DOBBS: Greenspan pointed out that he is very hopeful because of three major factors. One, lower energy prices, second, lower interest rates, and thirdly the tax rebates coming from the Bush tax cut that will start hitting mailboxes next week. Does that also salve your concerns?

KRUGMAN: I'm nervous as I think he is. You know, all of the major recessions we've had for the last 40 years have been basically caused by the Fed. It was the Fed raising interest rates to bring inflation down. And this one, although the Fed did a little of that, is basically the first one we've seen in generations that was caused by a bubble in the private sector. It was caused by overinvestment. And it's somewhat an uncharted territory here. We don't know how much Fed cutting it takes.

DOBBS: To restimulate business investment, capital investment and corporate buying?

KRUGMAN: I think frankly it's got to be -- business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).

DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she -- or I should say he and she, can they bring back this economy?

KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don't know.

And wait..how about here which looks to be dated around the launch of the Euro:

http://www.pkarchive.org/global/welt.html

Die Zeit: German Finance Minister Oskar Lafontaine has been calling for lower interest rates for weeks. But the presidents of the central banks have mostly told him that interest rates in Europe are already too low and are certainly not preventing growth.

KRUGMAN - During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn't you lower interest rates? In Europe, growth stagnates, prices fall – everything suggests that part of Euroland's economy is not active. Why shouldn't the ECB try to stop the drift into deflation?

krugman is a moron, sorry, my 2 cents

arafat wins a nobel peace prize for putting bombs on school buses and krugman wins a nobel prize for advocating an economic theory of 2 +2 =5.

the second "2" was governent spending accompanied with a 1.5 multiplier

cheney to dick clark: "it's our turn to run the deficits"

ironic given the surpluses he and shrub inherited from clinton and co.

i know, it's all that moron krugman's fault...and obama

it was all his idea to bail out aig and all the banks...paulson worked for obama right??

lmao, very true you 3, we would be so lucky if the only moron was krugman

By Mary Childs and Tom Keene
Sept. 8 (Bloomberg) -- The economic assumptions of Paul
Krugman and Bradford DeLong are based on “flawed” versions of
John Maynard Keynes’s model, according to Niall Ferguson, a
history professor at Harvard University.
“They have a flawed Keynesian model in their minds about
what fiscal stimulus can do when you already have a highly
indebted economy,” Ferguson said in a radio interview today on
“Bloomberg Surveillance” with Tom Keene. “We’ve seen this
movie in Japan before where you end up with an explosion of
public debt but a flatlining economy, and gradually that debt
burden, even at low interest rates, begins to be more of a
burden than a source of stimulus.”

Don't bother Riversider with reality - he still thinks that money is created in exploding stars!

Krugman is a partisan shill for ultraliberal policies. He is intellectually inconsistent. He gets way more attention than he should.

and you are?

LICC,

I'm still waiting for those examples of where you differ from Republican talking points.

columbiacounty Ignored comment. Unhide columbiacounty

Nothing like it when LICC calls a Nobel Prize-winning economist a "shill" and "intellectually inconsistent."

Gosh garn it, LICC, can't wait to see your best prize ever: third place in the Intellectual Peewee League!

http://www.zerohedge.com/article/ridiculed-americans-everywhere-krugman-now-threatens-gives-unsolicited-advice-germany-pisses

These days it's hard being a religious fanatic, also known as a Keynesian. It is even harder when you are Paul Krugman (sadly, the cornerstone of NYT's entire paywall strategy), and everyone in your own country is already sick and tired of, and openly ignores your constant appeals to drown the world in new and record amounts of debt, thus ignoring your appeals with impunity. So what do you do when nobody takes you seriously for thousands of miles around? Why you go even further - to the core of Europe in fact... where you proceed to threaten, badger, insult and give your unsolicited advice to anyone that listens. That "unlucky soul" in this case happens to be Germany daily Handeslbatt, which ran an interview with the "economist" in which Krugman stick not a foot, but an entire SS-20 nuclear warhead armed ICBM, in his mouth. And since Krugman is unaware, preaching the benefits of record deficit spending in Germany, ever since that little experiment in hyperinflation known as the Weimar Republic, tends to generate adverse reactions. Which is precisely what happened in this case. Luckily, now Krugman is a persona non grata in at least one country. Unfortunately, it is not the one in which his trite platitudes and melancholic remembrances of the golden days of Greenspan's credit bubble are still published on a daily basis.

Shlaes picks apart Krugman again:

http://www.economics21.org/commentary/response-paul-krugman%E2%80%99s-depiction-1937

Paul Krugman draws an analogy between United States in 1937-1940 in his Labor Day column. . . .

Dr. Krugman’s argument is a strange one, worth retracing year by year. For a systematic review of that period does not suggest that massive spending at the current point in U.S. history makes sense

Pres, I differ with Republican positions on gun control, abortion and gay marraige, just to come up with some things off the top of my head.

Please tell all the differences you have with the MSNBC view of everything.

So has this thread turned into an anti-Krugman echo chamber? Well, if you guys are so much smarter than Krugman, how come your not all filthy rich?

"Pres, I differ with Republican positions on gun control, abortion and gay marraige"

So you support Republican talking points 101% in terms of economic policies? Tax cuts for the rich, no unemployment insurance, privatize Social Security, no Medicare, etc.?

"Please tell all the differences you have with the MSNBC view of everything."

Since when is MSNBC a political party? For your info, when it comes to immigration, I am VERY conservative. I am so conservative, I make most Republicans look like a bunch of moveon.org liberals.

I'm not sure what Pres is talking about, but those are not Republican positions.

Liberal Dems have the same views as MNSBC.

"So you support Republican talking points 101% in terms of economic policies? Tax cuts for the rich, no unemployment insurance, privatize Social Security, no Medicare, etc.?"

It's the intelligent way. But no income tax at all...

"arafat wins a nobel peace prize for putting bombs on school buses and krugman wins a nobel prize for advocating an economic theory of 2 +2 =5."

don't forget the prize that went to the african lady who said that AIDS was created by the white man to kill black men.

Also, the leader of the regime won the nobel peace prize for a a a a a a, please someonne remind me.

So lets be clear. Krugman said, back in 2002, some vague comment about us needing to get several sectors back on track, including housing. That is NOT saying "we need a real estate bubble." let's also be clear, by 2005, he was saying that he thought that we might be in a real estate bubble and was warning the Fed and administration to something about it.

How this all helps your "argument" is beyond me.

"I'm not sure what Pres is talking about, but those are not Republican positions."

Really? You mean no Republicans support privatizing Social Security and tax cuts for the rich? Have you read Paul Ryan's "Roadmap"?

Pres believes in raising taxes on 50% of this country's small business profit and continuing the Social Security ponzi scheme as is. Pathetic.

I read the Road Map. It in no way calls for the end of Medicare or unemployment insurance. You are disengenuous yet again Pres.

I'd say the worst nobel choice, if not for all the other horrible choices... Jimmy Carter. Forget his awful presidency, his awful book set back mid-eastern relations 20 years... and he made accusations he refused to back up or debate.

"Pres believes in raising taxes on 50% of this country's small business profit "

Epic fail. That comes from the fact that those who make such an arguement (see the WSJ from Sept 3) count partnership income, sole proprietor income, or S corporation income as "small-business income." Ergo the partners in private equity shops, hedge funds, investment banks, auditing firms, law firms, and doctor's offices, among others, count as "small businesses" and those profits are included to get to this 50% of profits figure.

KKR, Lazard, Skadden, Blackstone, and other partner's income counts towards this. So do Beveryly Hills plastic surgeons.

Etc. These people are NOT going to plow these profits into jobs.

Epic, epic, fail.

Jason - You write 'That is NOT saying "we need a real estate bubble."' So what part of Krugman's "Alan Greenspan needs to create a housing bubble" do you not understand?

Can anyone please touch me? My husband knows that "thousands of people have touched [me]". But no one today.

jason thinks that since law firms and doctor's offices would be among all the types of businesses that would suffer from raising taxes, it is ok. Idiotic argument.