Krugman is an especially slippery weasel because he writes in such a way to never take the blame for what he says, but to always take responsibility when there's congratulations going around.

Krugman relies on flimsily defined words to give him wiggle room to backpedal later.

First, he is quoting someone else (Paul McCulley)... is he agreeing with Paul McCulley, or is he merely advising of what Paul McCulley thinks?

Second, he has chosen to quote someone who it is questionable whether they themselves were engaged in normative or positive statements. "Need" could be interpreted as "I suggest this is a good course of action, therefore you NEED to do this" or it could be interpreted as, "Greenspan is Fed chairman. Fed chairman is responsible for economic stability. Therefore, Greenspan NEEDS to blow a bubble. I don't necessarily agree with that."

Third, he advises that "within limits" it's possible Greenspan may have done "the right thing." Krugman doesn't define what the "limits" are that he's referring to, or in what context "the right thing" has been done (as stated above, is it the "right thing" for a person acting as Fed chairman/steward of a stable economy to do, is it the "right thing" to do from an objective economic standpoint, is it the "right thing" to do because it was somehow morally unconscionable (a favorite bromide of the Left) to act otherwise?

Krugman isn't clear on any of this, on purpose, whether he did this conscious of his manipulative behavior, or subconsciously. NOW, when he looks like he effed up BIG time and everyone is digging through his quotes trying to get him to fess up to being a hypocritical maroon, he can say something like, "Well now, I said within limits and, (begins to move goalposts) the limits I was referring to would not justify the actions Greenspan later took that caused this economic catastrophe so... I'm right!"

So, I am curious, do we need to keep responding to Krugman and ripping apart his ridiculous fallacies as long as he's still making them, or is there ever a point where we can call this case closed and move on to bigger and better Marxists?

Because this guy seems to have a seriously large set of lungs.
 

Paul Krugman, undated

"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?"

May 2, 2001


I've always favored the let-bygones-be-bygones view over the crime-and-punishment view. That is, I've always believed that a speculative bubble need not lead to a recession, as long as interest rates are cut quickly enough to stimulate alternative investments. But I had to face the fact that speculative bubbles usually are followed by recessions. My excuse has been that this was because the policy makers moved too slowly -- that central banks were typically too slow to cut interest rates in the face of a burst bubble, giving the downturn time to build up a lot of momentum. That was why I, like many others, was frustrated at the smallish cut at the last Federal Open Market Committee meeting: I was pretty sure that Alan Greenspan had the tools to prevent a disastrous recession, but worried that he might be getting behind the curve.

However, let's give credit where credit is due: Mr. Greenspan has cut rates since then. And while some of us may have been urging him to move even faster, the Fed's four interest-rate cuts since the slowdown became apparent represent an unusually aggressive response by historical standards. It's still not clear that Mr. Greenspan has caught up with the curve -- let's have at least one more rate cut, please -- but the interest-rate cuts do, cross your fingers, seem to be having an effect.

If we succeed in avoiding recession, this will mark a big win for let- bygones-be-bygones, and a big loss for crime-and-punishment. And that will be very good news not just for this business cycle, but for business cycles to come.

July 18, 2001


"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"

August 8^th 2001

"KRUGMAN: I'm a little depressed. You know, inventories, probably that's over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven't fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It's not a happy picture."

August 14, 2001


"Consumers, who already have low savings and high debt, probably can't contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery.... But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates -- and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1.... Sooner or later, of course, investors will realize that 2001 isn't 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.
 

Paul Krugman, 2005

"The important point to remember is that the bursting of the stock market bubble hurt lots of people - not just those who bought stocks near their peak. By the summer of 2003, private-sector employment was three million below its 2001 peak. And the job losses would have been much worse if the stock bubble hadn't been quickly replaced with a housing bubble.

So what happens if the housing bubble bursts? It will be the same thing all over again, unless the Fed can find something to take its place. And it's hard to imagine what that might be. After all, the Fed's ability to manage the economy mainly comes from its ability to create booms and busts in the housing market. If housing enters a post-bubble slump, what's left?"
 

My reading of certain books, articles, and websites has made me ignore Krugman or be wary of his advice... but after this...

I'm very upset that a man with such awards, such a megaphone, could suggest such things!