Krugman Refutes Two Bogus Right-Wing Economic Arguments
FROM PAUL KRUGMAN’S BLOG on the NYTIMES
On not listening
November 3, 2009
Edmund Phelps begins a column “explaining” disputes in economics by saying
Keynesian economics, which had been nearly forgotten inside the macro field, has found new voices from outside. They take the position that fiscal “stimulus” of all kinds is effective against slumps of all causes.
OK, no point in reading any further.
Nobody, and I mean nobody, holds that alleged position. The position held by Keynesians — by the way, if Keynesian economics has been “nearly forgotten inside the macro field”, someone should tell Greg Mankiw that he’s an unperson — is that fiscal stimulus is necessary only under certain special conditions. Namely, when you’re up against the zero lower bound, and conventional monetary policy is useless, fiscal stimulus may be your best option.
And we are at the zero lower bound right now, for the first time in 70 years. That’s why fiscal stimulus is on the agenda — not because Keynesians believe that deficit spending is always and everywhere the best policy.
But this complete misrepresentation by Phelps — it doesn’t even rise to the level of caricature, since it bears no resemblance to what people like me are saying — is characteristic. For the most part, the opponents of stimulus just don’t listen; they have this image of the idiot Keynesian so fixed in their minds that they can’t be bothered to pay any attention to the actual arguments.
You might have thought that the worst economic crisis since the 30s, a crisis that should not have happened according to non-Keynesian models, would prompt at least a little intellectual curiosity. But no.
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CRE and the CRA
November 2, 2009
Zombies, zombies, everywhere. One of the enduring myths of the financial crisis has been the claim that it was the result of (a) Fannie and Freddie (b) the Community Reinvestment Act, which forced poor, helpless bankers to make loans to you-know-who. It’s a myth that won’t go away — I get asked about it almost every time I give a public lecture — even though it has been extensively debunked. (See, e.g., here.)
But reading this scary piece about commercial real estate, I realized that CRE offers yet another debunking. After all, there was no federal act driving banks to lend money for office parks and shopping malls; Fannie and Freddie weren’t in the CRE loan business; yet 55 percent — 55 percent! — of commercial mortgages that will come due before 2014 are underwater.
The lenders didn’t need government urging to dive deep into a property bubble, and drown.
November 8th, 2009 at 6:44 pm
Thanks for posting.
It is a tragedy that as a result of extreme political partisanship, the U.S., supposedly the most economically sophisticated nation around, cannot even implement the most basic economic policies to reduce the effects of a recession.
This is nuts.
November 9th, 2009 at 10:23 am
The commercial end will sink the ship and India has seen the light; She`s buying all the gold available in preparation for the flight from the american green-back. China will blow America out of the water if She too, follows a similar path. But what will the yellow skins do, with all those treasuries?
November 9th, 2009 at 3:43 pm
Nuts, indeed, and no stones hard enough to crack them. All peas in a pod, these macro Ayn Randish shills. 55% of Freddie loans due in 2014? Perfect. All the while the nation’s households make 1% when compared to congress members at 44%. As Danny Schecter has said, “The more you watch, the less you know.”
Skip Gates was on with an NPR woman last night. He’s got a new film coming out soon that is basically about, “Is this what Martin Luther King died for?” He visits the huge Cook County Prison in Chicago, of course, privatized, owned by one of Murdoch’s sub-companies…, ah, the the right wing spin-mill is still channeling Hoover. Pure capitalist phantasms for the proles.
Big profit to be made in locking innocent kids of color up. The person who toured Skip responded to the question: “How many of these kids living 4 to a cell with one commode in the center of the concrete floor (this is _degrading_ ~ intentionally….) should be in drug treatment programs if one was available?”
“Oh, at least 75% of these kids would not be in jail if treatment programs existed.”
Skip went on to note that close to 80% of families in Chicago are headed by single moms. There are no opportunities for them. Too often, few will to rent to a female Black or Latino family. He went on: “I go to NYC on sabbatical and every block one steps over 4 or 5 homeless blacks living on the streets, all over town, some with kids. What kind of life is that for a kid of color? I remember I went to NYC in the 60′s for class trip, and there were no people of any color living on the streets. This is appalling. I will fight to the death to make sure everyone has open opportunities, no matter where they start out, what color or social situation.”
He also mentioned: “When we bought our house in Lexington, about 15 min’s from Harvard, I purposely went to the police station and asked them to watch over our house when we were gone. They said, ‘Oh yes, Professor Gates, we’ll tour around it lots of times at night.’ Well, you know the rest of the hyped story. I did not go to see them for protection. I went because I’m about the only black male face in town. I sometimes work late and drive home very late some nights. Those cops react without thinking if they see a face like mine dressed nice in a shiny new car driving around the rich white folk’s neighborhood.
just
On marches the right wing spin corps. War drums are louder, in the Kush-war, in Lebanon now as the IDF with US help of ‘advisors, 400 troops and 5 super helicopter gun ships: Top it off with some indications of the Fort Hood drama was a made for TV film to protect cases filled with Chinese money. The elder Bush flew from Germany to Ft Hood just 2 days before the shooting spree with the stash. Why did they call in 4 helicopter gun ships in Texas, if it was only a lone gunman gone a bit loco? Sure looks like a made for media empire movie script with over-kill to etch the images deep in the minds of compulsive ‘news junkies.’ Goebbel’s musings about how to “turn lies into received truth with relentless repetition” come to mind yet again. “Tedium is among the worst of pains….” (John Champlin Gardner)
November 9th, 2009 at 3:57 pm
Just read the “Economist” e-magazine article about the Ft. Hood events. It said, “It could not have happened at a worse time.” Could it perhaps not have been a better time? Waning support for the Afghan eternal war might well begin to erode the military industrial complex stranglehold on the US economy. More and more are aware of how deeply the banking hegemony manipulates events for their own purposes. Military Hardware producers have to finance their production somehow. Think of what the Bush plutocrats want with great stacks of Chinese cash in their heavily guarded Texas compound….
A few days ago, I felt the itch of something coming, something bigger than usual. Lo’ and behold….