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Some big provable example of Krugman getting his economic analysis seriously wrong?


feargach

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And I wouldn't count a six-month error in predicting either a boom or bust as seriously wrong. That would be normal everyday variance.

It seems to be "basic wisdom" (most expecially among the kinds of commentator that was convincing everyone back in 2006 that the house market was due for the softest of all landings before taking off int oa renewed boom) that everyone agrees that Krugman is doo-lally, off the reservation, nutso yada yada yada.

But when you examine the substance of his statements, you discover that it accords entirely with the known facts at the time of the statement. The poor reputation he has gathered amongst the online conservative family of heavy posters seems to be exclusively based on virulent (and fact-free) attacks made on him by Tea Party-inspired US activists.

When you examine the content of his posts and columns, you are left bereft of any evidence to show that the Nobel committee erred in giving him the prize. That's as far as I can see, though. Maybe you can think of some vaguely reasonable justification for all the vitriol. I'd be happy to look into it.
 


roc_

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Silence...

More silence...

The consensus on p.ie does not like Krugman. He may hit them with something like this (how the the French fared in industrial production in the 1930's for being the diehard defenders of the gold standard)...



... and harm the value of the gold sovereigns they have hidden in their hotpresses.
 
D

Dylan2010

Silence...

More silence...

The consensus on p.ie does not like Krugman. He may hit them with something like this (how the the French fared in industrial production in the 1930's for being the diehard defenders of the gold standard)...



... and harm the value of the gold sovereigns they have hidden in their hotpresses.
this is what I dislike about economic arguments. There is a saying that if you keep your dataset short enough you can prove just about anything. 8 years of data and one of the thousands of economic reasons why one country may have fared better or worse then another country. Even Al Gore would run you out of town for a shoddy use of statistics
 

feargach

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this is what I dislike about economic arguments. There is a saying that if you keep your dataset short enough you can prove just about anything. 8 years of data and one of the thousands of economic reasons why one country may have fared better or worse then another country. Even Al Gore would run you out of town for a shoddy use of statistics
Who's the bounder that's preventing you from posting your preferred, longer dataset? Fie upon him! Poor show, that man! Or are you simply saying that no new data has been made public since 1937?
 
D

Dylan2010

Who's the bounder that's preventing you from posting your preferred, longer dataset? Fie upon him! Poor show, that man! Or are you simply saying that no new data has been made public since 1937?
I ve no interest in France I'm afraid, they industralised late, and they couldnt defend themselves against an inferior force "on paper" in 1939. Maybe they were just crap at making stuff? Likewise Britain in the 70's , no monetary policy would have made BL cars any better. :shock:
 

Cassandra Syndrome

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Paul Krugman is the worst economist in the world and also the biggest hypocrite I have ever read. Today Rick Santelli from CNBC is the latest astute pundit to laugh at him.

Rick Santelli On Paul Krugman: "Never Heard Of Him" | zero hedge

He has been invited to openly debate the Austrian School Business cycle, I doubt he will take up on it, what the krugger being an economic illiterate and all that.

I Dare Paul Krugman To Debate Austrian Theory | zero hedge


He gives out about the housing bubble from 10 years ago and calls for a mega stimulus package, both Fiscal and Monetary. But here some quotes from him 10 years ago calling for a housing stimulus package. He must have extreme amnesia or just plain stupid.

Here is Paul Krugman from his blog trying to deny that he was a persistent advocate for the housing bubble and below that are quotes from him just prior to the bubble taking off. ht Benjamin Lee
==============================================
“And I was on the grassy knoll, too”

One of the funny aspects of being a somewhat, um, forceful writer is that I’m regularly accused of all sorts of villainy. I was personally responsible for the demise of Enron; my nonexistent son worked for Hillary; etc.. The latest seems to be that I called for the creation of a housing bubble.

Paul Krugman

=================================================

German Interview, undated

The Unofficial Paul Krugman Web Page

“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

The Unofficial Paul Krugman Web Page

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

The Unofficial Paul Krugman Web Page

“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

The Unofficial Paul Krugman Web Page

“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

The Unofficial Paul Krugman Web Page

“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.

October 7, 2001

The Unofficial Paul Krugman Web Page

“Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.

In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package”

Dec 28, 2001

The Unofficial Paul Krugman Web Page

“The good news about the U.S. economy is that it fell into recession, but it didn’t fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed’s dramatic interest rate cuts helped keep housing strong even as business investment plunged.”
Krugman Did Cause the Housing Bubble

What a loser.
 

feargach

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So, as you say, in 2001, Paul Krugman predicted that the driving force behind US economic growth would be housing.

From 2001 to 2008 the overwhelming component to US economic growth was... housing.

Thanks Cassandra, for helpfully pointing out an extremely accurate Krugman prediction to undermine your own stated point with. You crazy rhinestone.

Of course, Krugman never said that a long-lasting housing boom was a good thing, and as the bubble reached loony heights, he was right in there demanding policies to check the inordinate housing bubble with Nouriel Roubini et al.
 

Tim Johnston

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So, as you say, in 2001, Paul Krugman predicted that the driving force behind US economic growth would be housing.

From 2001 to 2008 the overwhelming component to US economic growth was... housing.

Thanks Cassandra, for helpfully pointing out an extremely accurate Krugman prediction to undermine your own stated point with. You crazy rhinestone.

Of course, Krugman never said that a long-lasting housing boom was a good thing, and as the bubble reached loony heights, he was right in there demanding policies to check the inordinate housing bubble with Nouriel Roubini et al.
The suggestion is that Krugman advocated the creation of the housing bubble rather than merely predicting it.
 

feargach

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The suggestion is that Krugman advocated the creation of the housing bubble rather than merely predicting it.
Yes and there are people with mashed banana in their underpants who make far superior suggestions.
 
D

Dylan2010

The suggestion is that Krugman advocated the creation of the housing bubble rather than merely predicting it.
indeed , and if his training was valid he should have had several paragraphs on why it would have been a bad idea, the silence implies that he thought it was a reasonable course of action , as in his head productivity place second fiddle to short term GDP growth regardless of how it was arrived at or the long term consequences
 

atlantic

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feargach

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indeed , and if his training was valid he should have had several paragraphs on why it would have been a bad idea, the silence implies that he thought it was a reasonable course of action , as in his head productivity place second fiddle to short term GDP growth regardless of how it was arrived at or the long term consequences
the silence (to your mind) implies that he thought it (being an eight-year mega-bubble leading to NINJA loans) was a reasonable course of action?

Molehill into mountain.

If I want to see a moderate uptick in market X in year 1, does that mean I am automatically signing on for a massive hyperbubble in the same market a decade later?

Obviously not. If I call for an uptick in a given market in 2001-2002, I'm calling for an uptick in that period.

If any mouth-breathing yahoo wants to accuse me of calling for an immense bubble seven years later in the same market, you'd better have audio and video proof of me saying that I want 50-60% growth over the next decade.

So, the only criticism of Krugman offered is an obvious howler of a lie. Krugman spoke in favour of some measure recovery in the housing market in the immediate wake of the first Bush recession.

And on the basis of no evidence whatsoever this is being spun into the pretence that Krugman favoured the red-hot bubble that wrecked America in 2003-2008. Krugman, of course, spent that entire period howling for the bubble to be restrained by various means, that is a matter of public record.


But who cares what the records say when you can just lie! See how well it works for Palin et al.

Except it doesn't. On this side of the pond we check facts.
 
D

Dylan2010

the silence.........
the whole point is that one doesnt know what effects one will see down the road. Remember as well as a housing bubble we had a commodity bubble based on loose money policies around the world. The Fed creates the credit but it cant direct it. So I doubt Krugman and even Greenspan expected a red hot bubble and financial chaos , I'm sure they expected some nice plateau with a bigger economy to soak up the nitrous that was being adding to the system. I can only argue that short termism is bad and that a hard recession in 2001 would have been better then trying to fight it to create bigger risks down the road. I'd argue the same in 2008/2009 , it will be 3 to 5 years in the future to know how badly things turn out. In the meantime krugman et al can prattle on about how things would be better if more digital money is zapped into existance because they know exactly how this will affect the bond maket , commodity /currency markets etc... NOT!
 

Cassandra Syndrome

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Feargach. Shut up and read some Austrian Business Cycle macroeconomics for a change. Learn the outcome of artifical low interest rates below the natural rate on society as the tug of war between consumption and investment in capital resources becomes too intense, resulting in bubbles.

Krugman in 2001 yelled from the rafters for the Feds to lower the rate AND fiscal stimulus from the government. The greatest bubble and misallocation of resources of all time resulted directly from this, just as Frederick Hayek illustrated this can happen back in the 1930s.

Now Krugman plays all innocent, blaming the housing bubble from the Bush administration and advocates printing money out of thin air. He even claims Japan didn't print enough money for the past 10 years to stave off deflation. He is beneath contempt.

Everyone with their head screwed on, been in the real world, knows economics as a social science laughs at him. He is an embarrassment for Neo Keynesianism, which in itself is whacko. The cast of this year's Irish Apprentice could come up with a better task on how to allocate scarce resources.
 

Kalan

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Scholarly

And I wouldn't count a six-month error in predicting either a boom or bust as seriously wrong. That would be normal everyday variance.

It seems to be "basic wisdom" (most expecially among the kinds of commentator that was convincing everyone back in 2006 that the house market was due for the softest of all landings before taking off int oa renewed boom) that everyone agrees that Krugman is doo-lally, off the reservation, nutso yada yada yada.

But when you examine the substance of his statements, you discover that it accords entirely with the known facts at the time of the statement. The poor reputation he has gathered amongst the online conservative family of heavy posters seems to be exclusively based on virulent (and fact-free) attacks made on him by Tea Party-inspired US activists.

When you examine the content of his posts and columns, you are left bereft of any evidence to show that the Nobel committee erred in giving him the prize. That's as far as I can see, though. Maybe you can think of some vaguely reasonable justification for all the vitriol. I'd be happy to look into it.
 

Kalan

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Krugman did not receive the Nobel for his journalism but for his scholarly work, which is not printed in the NYT.
 

Tim Johnston

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Krugman in 2001 yelled from the rafters for the Feds to lower the rate AND fiscal stimulus from the government.
He is still yelling for more stimulus, claims the billions that have been thrown at the US economy are not enough. See, if your theories don't work out just SHOUT LOUDER
 

atlantic

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He's lookin for them to print 8 trillion FFS.
It's awful easy for a pleb like Krugman to harp on ,he will be fine while the people will be paying 20 dollars for a loaf of bread and half starved.
He is still yelling for more stimulus, claims the billions that have been thrown at the US economy are not enough. See, if your theories don't work out just SHOUT LOUDER
 

patslatt

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The Great Depression was a long time ago

And I wouldn't count a six-month error in predicting either a boom or bust as seriously wrong. That would be normal everyday variance.

It seems to be "basic wisdom" (most expecially among the kinds of commentator that was convincing everyone back in 2006 that the house market was due for the softest of all landings before taking off int oa renewed boom) that everyone agrees that Krugman is doo-lally, off the reservation, nutso yada yada yada.

But when you examine the substance of his statements, you discover that it accords entirely with the known facts at the time of the statement. The poor reputation he has gathered amongst the online conservative family of heavy posters seems to be exclusively based on virulent (and fact-free) attacks made on him by Tea Party-inspired US activists.

When you examine the content of his posts and columns, you are left bereft of any evidence to show that the Nobel committee erred in giving him the prize. That's as far as I can see, though. Maybe you can think of some vaguely reasonable justification for all the vitriol. I'd be happy to look into it.
http://www.politics.ie/economy/141572-comprehensive-study-145-countries-government-spending-depresses-private-sector.html

Krugman's Nobel prize was in international trade economics,not business cycles. It seems he is too influenced by the favourable experience of Keynesian type stimuli in the Great Depression and the early postwar era. In the past 40 years, as government has become huge in advanced economies,diminishing economic returns and negative returns from government spending stimuli were bound to set in given the commonsense assumption that countries can't spend themselves rich. But old fashioned Keynesians refuse to accept that,whereas Keynes himself probably would have recognised the limits to government spending.
 

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