Showing posts with label Paul Krugman. Show all posts
Showing posts with label Paul Krugman. Show all posts

Saturday, June 04, 2022

Elon Musk's Irresponsible Economy Comment: "Super Bad Feeling"

Elon Musk started believing his own hpye, the image created by him and his rabid fans on Twitter, an echo chamber that just might mirror Putin's TV shows across Russia. Capitalism can be its own autocracy. I am on record for being for a wealth tax.

Musk's Twitter move would have been good if his motive were right, but now we know it wasn't.

Should Elon Musk Be Owning All Of Twitter?
Musk's 44 Billion Dollar Give To Foolish Fascism

Maybe he should hang out with Peter Thiel less often. He might end up leaning less right. Stop texting.

Musk's "super bad feeling" about the economy is him trying to blame the market for the tumbling shares of both Tesla and Twitter. There seems to be nowhere to go but down. Musk fears the Tesla shares might go further down, with the Twitter deal albatross around his neck, and so he is trying to prepare the market. I don't think it is going to work.

I am neither bullish nor bearish on the economy. On those matters I let Paul Krugman talk.

From: Paramendra Kumar Bhagat
Date: Tue, May 31, 2022 at 9:11 AM
Subject: Paul, you are my favorite part of the New York Times, my favorite newspaper

Hello Paul. I was just reading this and for the first time, I noticed this email address at the bottom and figured, hey why not write to him? I could help balance out the hate mail he gets. It could not hurt!

The only thing I disagree with you on is Bitcoin. It is exotic to me how you are missing out. This is like missing out on the Internet in 1995. My thoughts on Bitcoin are here: It would be a coup for me if I could "convert" you. Bitcoin is biblical. The Age Of Abundance that has been promised in the scriptures is upon us. Bitcoin is the best thing to come out of the 2008 crisis.

Your arguments tend to be so lucid, I am often tempted into thinking, if only Marjorie Taylor Greene could subscribe to this newsletter, American politics would see a tectonic shift for the better. :) But we both know that is not in the cards. The mental blocks are real. It is not your writing that is lacking.

I wish NYT also featured a right-wing Paul to balance things out, the column clearly labeled right-wing, something like A Voice From The Right. You succeed so fully in your writings, sometimes you make me feel like I am in an echo chamber. :)

I was a fan of your column before you won the Nobel. You are the only NYT columnist who shows in my email. If I see your column anywhere, I read it.

In fact, my respect for the Nobel people went up after you won. Even a columnist can win the Prize. How Ivory Tower can it be?

NYT should emphasize the psychology of some of the right-wing phenomena. But then it does. Only last week I read the transcript of the Ezra Klein Show. The guest argued people are lonely. And then they fall for all that hate.

Sangham Sharanam Gachhami. (I go to the community.) As the Buddhists say. "Whenever two or more of you gather in my name, there I will be." That is a promise in the Bible. One-third of Americans live alone. That is blasphemous.

I subscribe to the NYT online for $1 a week. Probably the best bargain I ever got. Except for when there was no paywall. :) Come to think of it, crypto can solve the paywall problem. Super micropayments are the way.

What I admire most about you is your earnest desire to reach out to ordinary people with your complex topics explained as simply and clearly as possible. I wonder how many rewrites that might take.

Check me out on Mirror and see if you don't want to start creating Writing NFTs yourself. When you mint your first Writing NFT, you are converted. And I will take a victory lap. :)

Have a good day.


Before he makes his off the cuff science fiction announcements, perhaps Elon Musk should hold a convo with his top engineers.

With his Twitter antics Musk has managed to kill two birds with one stone. Both Tesla and Twitter seem to be going down.

Musk had been giving the impression there was a time not long ago when he was hanging on to the Tesla rocketship barely by the fingernails. And now he is saying he can walk and chew gum at the same time? Already people thought he spent all day on Twitter. And then he threatened to buy Twitter and become CEO. Tesla also had been facing some bad news of its own.

Elon. Renounce Trump. Repent. There are plenty of Republicans to choose from. Well, maybe not that plenty. But still, you get my point. Trump is fascist. Look at January 6.

Tuesday, December 17, 2019

Is The Trade War Over?

Having a leader who is neither trusted by our erstwhile friends nor feared by our foreign rivals reduces our global influence in ways we’re just starting to see. Trump’s trade war didn’t achieve any of its goals, but it did succeed in making America weak again.

Monday, February 11, 2019

The Next Recession Might Force The US To Do Universal Basic Income

The next recession, which likely will hit before the next presidential election, might force the US to do a Universal Basic Income. The idea will be, every taxpayer gets a basic income (yes, the richest also do) directly from the government, no questions asked. It would likely be a direct deposit that shows up once a month.

Quantitative easing was a gift to the banks post 2008 recession. The Fed was basically printing money, lots of it, and handing it out to the banks at zero interest rates. That meets the definition of free money. Absent a real stimulus, which might have been closer to three trillion dollars, the system resorted to quantitative easing. The Fed did not need congressional approval to do that. It was Fed action. Like raising or lowering interest rates.

The interest rates are already near zero. The Fed does not have much wiggle room. And there is no Big Crisis to justify giving free money to the banks. We The People are an afterthought.

If it happens it will be interesting, because the Fed will introduce UBI (Universal Basic Income) without any presidential initiative or congressional approval. It will change the political paradigm in the country.

What do you think Paul Krugman? Will the next US recession gift us the Universal Basic Income? Is it an idea whose time has come?

Friday, October 07, 2016

Climate Change To Climate Catastrophe?

What About the Planet?

It’s time to end the blackout on climate change as an issue. It needs to be front and center — and questions must be accompanied by real-time fact-checking, not relegated to the limbo of he-said-she-said, because this is one of the issues where the truth often gets lost in a blizzard of lies.

Saturday, April 09, 2016

A Strong Critique Of Sanders From A Very Smart Liberal

Sanders Over the Edge by Bernie Sanders
he seemed to go for easy slogans over hard thinking. ...... Predatory lending was largely carried out by smaller, non-Wall Street institutions like Countrywide Financial; the crisis itself was centered not on big banks but on “shadow banks” like Lehman Brothers that weren’t necessarily that big. .......

Yet going on about big banks is pretty much all Mr. Sanders has done.

....... this absence of substance beyond the slogans seems to be true of his positions across the board. ..... a politician’s policy specifics are often a very important clue to his or her true character — I warned about George W. Bush’s mendacity back when most journalists were still portraying him as a bluff, honest fellow, because I actually looked at his tax proposals ...... Given her large lead in delegates — based largely on the support of African-American voters, who respond to her pragmatism because history tells them to distrust extravagant promises — Mrs. Clinton is the strong favorite for the Democratic nomination......

The Sanders campaign has brought out a lot of idealism and energy that the progressive movement needs.

I guess arithmetic is necessary. You do have to start and end with slogans. But there is that territory where you have to end up with concrete proposals, and see how you will make the budget work. I think many of Bernie's ideas actually are workable. But perhaps the policy work has not been done. It does not even have to be the campaign. I would be surprised if some obscure academic has not worked them out on his own.

I wish there were a way to fuse the idealism many of Bernie's young supporters feel and bring them about into governance. Part of that is a back and forth about becoming better educated about the political process. But the legroom is more than the New Democrat thinking of 1992 will have us believe.

I have not been following this election too closely. I definitely have not read up deeply on the various policy proposals.

FDR would send out the Labor leaders, go build the pressure on me. The idealists of today could perform a similar role. 

Friday, November 09, 2012

My Reason To Drive Off The Roof

I mean, to fall off the fiscal cliff.

Bad Advice From Paul Krugman

A great thing would be the unwise Bush tax cuts that should never have been implemented - I am for tax cuts that are paid for, not tax cuts that are paid for with money borrowed from the Chinese - would go away without the Republicans having to agree to the idea. They get to tell their base, we did not do it, the whole thing fell off the cliff, don't blame us.

A major cut in defense spending is long overdue. American leaders need to be more proactive about spreading democracy globally and about bringing forth rule of law between nations. Those steps allow America to bring down its defense spending by a large margin. Bring it down to $1 from $4. But cutting defense spending is politically unpopular. So letting some of it fall off the cliff might be smart politics. Look we tried, the thing fell off the cliff.

It is hard for Democrats to even think in terms of restructuring the entitlement programs. But some restructuring is necessary. The cliff can help you do that. It can be a huge political help.

Go over the cliff. Then close a trillion dollars in loopholes. Then bring about a second stimulus. I say a trillion dollars. Spend half of it to bring forth gigabit wireless broadband to every human being on the planet. Let there be light.

If you go over the cliff and don't bring a second stimulus, you are staring at a recession. But the stimulus is a one time thing. All the savings from going over the cliff help bring down the deficit and the debt in the subsequent years.
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Bad Advice From Paul Krugman

When the economist Paul Samuelson urged him to propose an income-tax decrease in 1961, Kennedy said there was no point, it would not pass the Congress. “But then you’ve fought the good fight,” Samuelson said. Kennedy’s answer to that was : “That’s vanity, Paul, not politics.”
Paul Krugman is my favorite political columnist. But he is an economist, not a politician, and it shows in this advice he has for the president. Paul Samuelson said “But then you’ve fought the good fight.” Paul Krugman is saying "No deal is better than a bad deal."

Let’s Not Make a Deal
Both the Bush-era tax cuts and the Obama administration’s payroll tax cut are set to expire, even as automatic spending cuts in defense and elsewhere kick in thanks to the deal struck after the 2011 confrontation over the debt ceiling. And the looming combination of tax increases and spending cuts looks easily large enough to push America back into recession...... nothing very bad will happen to the economy if agreement isn’t reached until a few weeks or even a few months into 2013 ..... standing up to hostage-taking is the right thing to do for the health of America’s political system..... No deal is better than a bad deal.
As for going over the cliff, is it like driving off the roof?

"He drove off the roof!"

Greece Drinks the Hemlock
lawmakers narrowly approved a $23 billion package of new austerity measures, including further spending cuts to social services, pensions and public salaries, as well as tax increases demanded by Greece’s European lenders. ...... In return, the troika of official creditors — the European Commission, the European Central Bank and the International Monetary Fund — promise to consider, but not guarantee, reducing the punitive interest rates they charge Greece for bailout loans and unlocking a $40 billion aid payment Athens needs to avoid a default on its debts. ...... just about everything in this austerity package has been tried before and failed disastrously. These unpalatable steps will do nothing to make Greece’s debts more payable, bring its budgets closer to balance or help make the structural reforms Greece needs to revive its economy. Instead they will almost certainly further shrink an economy that has already shrunk by an astounding 25 percent over the past few years, making fiscal improvement nearly impossible. ...... The austerity approach was supposed to reduce Greece’s ratio of debt to gross domestic product. But that ratio has grown, despite debt write-offs and bailouts, because the economy has contracted so much. The new package is expected to shrink it an additional 9 percent. ...... The only way forward is through more debt write-offs and more low-interest European loans, as well as by opening up restricted job markets. ...... measures that extend and deepen Greece’s severe recession are certain to intensify public opposition to labor market reforms that could increase an unemployment rate already over 25 percent. And imposing new fuel taxes and health care charges will hurt ordinary people and make a tax system that is scandalously unfair even more so
Happy Days, Even With the Cliff
The fiscal cliff doesn’t happen until the end of the year when the Bush tax cuts expire and monster budget cuts automatically kick in. ..... Trump has no conceivable impact on anything. ....... Boehner... “Mister President, this is your moment. We’re ready to be led” ....... sounded as if the only cliff-avoidance Boehner was really interested in was one that raised new revenue through “fewer loopholes, and lower rates for all.” ...... We have already seen that plan. It was proposed by a man who, on Tuesday, lost the state in which he was born, the state in which he was governor, and the three states in which he owns houses. Thanks to a blog by Eric Ostermeier in Smart Politics, I am able to point out that the only candidate for president who lost his home state by a larger margin than Mitt Romney was John Frémont in 1856. And Frémont was coming out of a campaign in which the opposition accused him of being a cannibal. ........ he’s an older white guy, and, therefore, part of the biggest loser demographic of the election, the flip-side of the insurgent Latino vote. ........ John Weaver worried about becoming “a shrinking regional party of middle-aged and older white men.” On Fox News, Bill O’Reilly moaned that “the white establishment is now the minority.” ..... O’Reilly, 63, added that the new majority was composed of people who “want stuff.” As opposed to older white men, all of whom have signed a pledge never to accept veteran benefits, Social Security or Medicare. ....... Cheer up, white men! You seem to be doing O.K. Next year women will have 20 percent of the seats in the U.S. Senate, and we’re celebrating. ..... If all else fails, strap John Boehner to the roof of a car.

How a Race in the Balance Went to Obama
Seven minutes into the first presidential debate, the mood turned from tense to grim inside the room at the University of Denver where Obama staff members were following the encounter. Top aides monitoring focus groups — voters who registered their minute-by-minute reactions with the turn of a dial — watched as enthusiasm for Mitt Romney spiked. “We are getting bombed on Twitter,” announced Stephanie Cutter, a deputy campaign manager, while tracking the early postings by political analysts and journalists whom the Obama campaign viewed as critical in setting debate perceptions...... No one wanted to go to the spin room and speak with reporters. ...... “Boy, the president is off tonight,” said Stuart Stevens, the senior Romney strategist, sounding mystified, according to aides in the room. ...... he would now accept and deploy the prewritten attack lines that he had sniffed at earlier. “If I give up a couple of points of likability and come across as snarky, so be it” .... His antipathy toward Mr. Romney — which advisers described as deeper than what Mr. Obama had felt for John McCain in 2008 — led the incumbent to underestimate his opponent as he began moving to the center before the debate audience of millions of television viewers. ...... The power of this operation stunned Mr. Romney’s aides on election night, as they saw voters they never even knew existed turn out in places like Osceola County, Fla. ..... On Tuesday night, a crestfallen Mr. Romney and his family watched as the television networks showed him losing all but one battleground state. ....... Romney, who had earlier told reporters he had written only a victory speech ...... It was 11:30 p.m., and Romney field teams in Ohio, Virginia and Florida called in, saying the race was too close for the candidate to give up. At least four planes were ready to go, and aides had bags packed for recount battles in narrowly divided states. Bob White, a close Romney friend and adviser, was prepared to tell the waiting crowd that Mr. Romney would not yet concede.... But then, Mr. Romney quietly decided it was over. “It’s not going to happen,” he said......... As Ann Romney cried softly, he headed down to deliver his speech ..... Obama had returned, if not to the candidate that he was in 2008, as a man hungry for four more years to pursue his agenda in the White House ...... Mr. Stevens argued that Mr. Obama’s dislike of Mr. Romney would lead the president to underestimate him. “They think there’s something intellectually inferior there,” he said later. Mr. Romney’s advisers also believed that Mr. Obama had demonized Mr. Romney to such an extent that their candidate would benefit when judged against the caricature....... In August, Mr. Romney began testing out one-liners on friends flying with him on his campaign plane. On issue after issue, Mr. Romney led discussions on how to frame his answers, to move away from the conservative tone of his primary contests in front of the largest audience he would have as a candidate.......... (Mr. Romney’s advisers broke out in laughter when the real Mr. Obama opened with a similar line, and nodded approvingly when a very prepared Mr. Romney countered with a gracious response that even Democrats said put Mr. Obama off balance.) ........ Nothing had been left to chance: Mr. Romney put on full makeup and did his final practice in a room set up to replicate, down to the lighting and temperature, the hall where he would meet Mr. Obama. ....... George W. Bush phoned Mr. Romney, too. ...... incumbent presidents almost invariably lose their first debate. ..... presidents are not used to being challenged, and unlike candidates, are out of practice at verbal jousting. ...... Obama showed no interest in watching the Republican debates. But his aides studied them closely, and concluded that Mr. Romney was a powerful debater, hard to intimidate and fast to throw out assertions that would later prove wrong or exaggerated. At one debate, Gov. Rick Perry of Texas criticized Mr. Romney for having praised Arne Duncan, the education secretary, days earlier. Mr. Romney flatly denied it, leaving Mr. Perry speechless. ....... “I’ll be there on game day,” he said. “I’m a game day player.” ..... came across .. as professorial, arrogant, entitled and detached from the turmoil tearing the nation. ....... appeared to be disdainful not only of his opponent but also of the political process itself. Mr. Obama showed no passion for the job ........ The voter-analysis database back in Chicago noted a precipitous drop in perceptions of Mr. Obama among independent voters, starting that night and lasting for four days, long before the public polls picked it up. Voters who had begun turning to Mr. Obama were newly willing to give Mr. Romney another look. ........ After the debate, Mr. Obama called Mr. Axelrod on his way back to the hotel room. He had read the early reviews on his iPad.... “I guess the consensus is that we didn’t have a very good night,” Mr. Obama told Mr. Axelrod.... “That is the consensus,” Mr. Axelrod said........... Romney soon recognized the scope of his accomplishment. He flew from Denver to Virginia for a rally the next day, and as the motorcade headed toward the event, there was so much traffic that Mr. Romney and his top advisers thought there must have been an accident. In fact, the roads were jammed with people on their way to see him. ........ Obama used his rallies to collect supporters’ telephone numbers and e-mail addresses. ..... the hurricane pushed him off the stage at a crucial time. ..... Colin Powell, a former secretary of state, endorsed Mr. Obama. The ad, Mr. Obama’s aides said, produced a spike of support from independent voters. (Mr. Obama’s aides grabbed the clip from a television interview with Mr. Powell, deciding not to chance asking him for permission). ...... The futility of that effort was apparent outside the sprawling Jeep assembly plant in Toledo, which had just had a $500 million renovation for production of a new line of vehicles, a project requiring 1,100 new workers...... “Everyone here knows someone who works at Jeep”
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Monday, September 06, 2010

This Is Like 1938

Paul Krugman, Laureate of the Sveriges Riksban...Image via Wikipedia

The government stepped in to bail out the banks. The government stepped in with a stimulus bill. But the government did not step in to create about five million jobs. That third part is the missing part of the zigsaw puzzle. The Great Recession has not been fed the Tennessee Valley Authorities of these times. It has been for the government to dream up the jobs of tomorrow and bring them home. And I am not talking cutting edge stuff that perhaps is best left to the visionaries and the qualified in the private sector, although even there, it can be argued, bold would be beautiful. Perhaps this is just the time for a Manhattan Project for the environment, or to take a man/human to the environmental moon.

The first stimulus bill was a little misguided. It was too small, the tax cuts were unnecessary. Too much of it went to just paying people unemployment and salaries until the economy went back to normal. That normal has not happened. Because this is not 2001 or 1992 or 1980. This is more like the FDR times. It is a great crisis that can be steered to create a better future than ever before existed. This is a time for big, bold action still.

Band aid solutions will not work. And caving into GOP fervor to go back in time will fare even worse. The electorate has to be saved from itself. The electorate has to be relentlessly educated to do the right thing in November.

What are the options?

Some say a second stimulus is a fiscal non event. It is not happening. I am not so sure.

The Fed has not exercised all the monetary options available. Paul Krugman seems to suggest that. And I agree. Letting inflation go up a little so it becomes expensive for the private sector to sit on the near two trillion dollars it is sitting on would be a great idea.

The president has to engage in vision talk. He has to start talking like he is the nation's CEO, which he is. You engage the leaders of all segments of the private sector in brainstorming sessions. You let them help you think in terms of the jobs, companies and industries of tomorrow. And you give a series of speeches. You are not proposing to spend. It is not about money. It is about making speeches to prop up private sector confidence. It is about pumping vision. Where there is no vision, the people shall perish. This is as important as fiscal and monetary moves, and the most in command of the top guy. And it does not cost money.

These are not normal times. The wheels of capitalism are not churning like they are supposed to. Capitalism is fish outside water right now. Political leadership matters more, not less.

This is not like 2001. This is not like 1992. This is not like 1982. This is more like 1938. What finally got America out of the flunk back then was the massive spending of World War II. For the American voter to vote for the cut-the-deficit people in November would be suicidal. This is time for more, not less spending. But more alone will not work. The spending has to be about creating the five million jobs of tomorrow. I am thinking more along the lines of basic retraining for solar panel installation and the like.

America does not need World War III, but it does need a second stimulus bill that will be geared towards giving history a push. It has to be about the government actively creating about five millions jobs of tomorrow. They would be to do with green tech, education, with health.

I am for a second stimulus bill that is a trillion dollars. Its primary component would be to guarantee 100 MB broadband to all Americans. It would require freeing up wireless spectrum not 10 years from now, but today. It would require South Korea like competition into the broadband sector. The Internet is the interstate highway of today. People telecommuting are people not having to drive to work. Save the sky. There would be a massive spending on retraining the jobless for the jobs of tomorrow. Shovel-ready is a worker who only needs three months of training. Dream up five million jobs in green/clean tech, in education, in health. Install tens of millions of solar panels. Cut the obesity in the country by half in five years. Send out health care workers with the task. Bring the illiteracy down. Send mobs of mentors into the inner cities. Pay them. Turn this into a country of 75% college graduates in five years by taking all courses and lectures and textbooks and journals online that anyone anywhere can access for free, ad supported.

This second stimulus has to be a declaration of war. America can afford to go from a 13 trillion debt to a 14 trillion debt, but it can not afford Great Depression II or World War III.

A trillion dollars is what America spent in Iraq alone. Some say it is but a third of what America spent in Iraq alone. A trillion dollars is not a lot of money in the big scheme of things.

New York Times

Housing Woes Bring New Cry: Let Market Fall: Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live...... a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash. .... Caught in the middle is an administration that gambled on a recovery that is not happening.... “They are deeply worried and don’t really know what to do.” ..... Sales of new homes are lower than in the depths of the recession of the early 1980s, when mortgage rates were double what they are now, unemployment was pervasive and the gloom was at least as thick...... “extend and pretend” or “delay and pray”

That ’70s Feeling:Steven Slater, a flight attendant for JetBlue, ended his career by cursing at his passengers over the intercom and grabbing a couple of beers before sliding down the emergency-evacuation chute ..... The “blue-collar blues” were so widespread that the Senate opened an investigation into worker “alienation.” ...... “I’d give the shirt right off of my back / If I had the nerve to say / Take this job and shove it!” ...... Workers have learned to internalize and mask powerlessness, but the internal frustration and struggle remain. ..... Today the concerns of the working class have less space in our civic imagination than at any time since the Industrial Revolution.

Paul Krugman: 1938 in 2010: The president’s policies have limited the damage, but they were too cautious, and unemployment remains disastrously high..... the year is 1938..... the nature of the recovery that followed refutes the arguments dominating today’s public debate, discouraging because it’s hard to see anything like the miracle of the 1940s happening again..... the stimulus raised growth while it lasted, but it made only a small dent in unemployment — and now it’s fading out......More stimulus is desperately needed ..... March 1938. Asked whether government spending should be increased to fight the slump, 63 percent of those polled said no. Asked whether it would be better to increase spending or to cut business taxes, only 15 percent favored spending; 63 percent favored tax cuts. And the 1938 election was a disaster for the Democrats, who lost 70 seats in the House and seven in the Senate....... World War II was, above all, a burst of deficit-financed government spending ..... the federal government borrowed an amount equal to roughly twice the value of G.D.P. in 1940 — the equivalent of roughly $30 trillion today. .... Deficit spending created an economic boom — and the boom laid the foundation for long-run prosperity. Overall debt in the economy — public plus private — actually fell as a percentage of G.D.P., thanks to economic growth and, yes, some inflation, which reduced the real value of outstanding debts. And after the war, thanks to the improved financial position of the private sector, the economy was able to thrive without continuing deficits. ....... when the economy is deeply depressed, the usual rules don’t apply. Austerity is self-defeating: when everyone tries to pay down debt at the same time, the result is depression and deflation, and debt problems grow even worse ...... Even under F.D.R., there was never the political will to do what was needed to end the Great Depression; its eventual resolution came essentially by accident. ..... politicians and economists alike have spent decades unlearning the lessons of the 1930s, and are determined to repeat all the old mistakes..... the big winners in the midterm elections are likely to be the very people who first got us into this mess, then did everything in their power to block action to get us out .... a little bit of intellectual clarity, and a lot of political will.

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Friday, August 27, 2010

Faux Recovery?

PRINCETON, NJ - OCTOBER 13:  Princeton Profess...Image by Getty Images via @daylife
Paul Krugman: New York Times: This Is Not a Recovery: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact...... If unemployment rises for the rest of this year, which seems likely, it won’t matter whether the G.D.P. numbers are slightly positive or slightly negative. ..... All of this is obvious. Yet policy makers are in denial. ...... officials seem loath to admit that the original stimulus was too small..... Obama ..couldn’t pass a supplemental stimulus now. ..... officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism. But they’ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody. And the likely result in November — big gains for the obstructionists — will paralyze policy for years to come ...... raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash .....we’ve already seen the consequences of playing it safe, and waiting for recovery to happen all by itself: it’s landed us in what looks increasingly like a permanent state of stagnation and high unemployment. It’s time to admit that what we have now isn’t a recovery, and do whatever we can to change that situation.
Paul Krugman is one of those guys who I almost always find myself in agreement with. We inhabit the same segment of the political spectrum. And he is an intelligent guy. I felt that even before he won the Nobel Prize.

He makes total sense. Actually his column today totally reflects what I said in a blog post yesterday.

Fears Of A Double Dip Recession Are Very Real

I was of the opinion that the stimulus should have been a trillion dollars. I have also talked in terms of a second stimulus bill. Paul Krugman shares those views.
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Friday, March 05, 2010

The Obama FDR Parallels

Paul Krugman, Laureate of the Sveriges Riksban...Image via Wikipedia
"The New York Times columnist Paul Krugman, who fears a lost decade, said in a lecture at the London School of Economics last summer that he has “no idea” how the economy could quickly return to strong, sustainable growth."
FDR's was the Great Depression. We are calling ours the Great Recession. FDR gave us Social Security, Obama is going to give Universal Health Care. The recession is over. The recession is not over. You love me, you love me not.

I think there are obvious parallels between the Great Depression and what we are going through right now, but it is also important to realize we are treading new territory.

(1) The Bailout

That was necessary. It is interesting that many of the banks have already paid back most of the money. I am on record at this blog saying that is what will happen, although I did not see it happening this fast. But they have not paid back all the money, so.

The bailout was putting the fire out. Without the bailout it would not have been a Great Recession but Great Depression II.

(2) The Stimulus 

It was necessary but insufficient. When it was put together, I was not shocked by the size of it. What did bother me was it focused too much on the past and too little on the future. I was surprised how little was allocated to broadband, for example.

(3) Banking Regulation

Work here has not gone as well as needed. Wall Street needs a new set of pants. Take off the boxer shorts. Put on some pants.

(4) Public Works Programs

Basically I am arguing for a second stimulus package that might be similar in size to the first one. This would be one pig push to create a truly post-industrial America. The first big wave of job creation will have to be the government's work, otherwise the 10% unemployment figure is feeling pretty comfortable where it is. You did not rely on the market for the bailout, or the stimulus, you sure do not expect the market to do the regulation work. That same courtesy has to be extended to job creation.

Most of the job creation will happen in the education and health sectors. Instead of creating a Tennessee Valley Authority, you would create a program to hire a ton of mentors to kick-start the inner cities, for example.

Universal and faster broadband is fundamental to this very idea. That is the centerpiece. That basic physical infrastructure is what will take both education and health to their next levels. Obama has to build that universal, faster broadband infrastructure like Eisenhower built the interstate highway system. Without that America is not going to become a post-industrial society. People will have to be plugged in.

The idea has to be for the government to hire five million people. If you are going to do it anyway, it makes no sense to do it later, or do it in small steps. Creating new jobs has to be the centerpiece of the second stimulus bill.

Education and health will have to be reimagined. That is why getting health care right is so key. It can't just be about adding entitlement programs for people who are known will not pay in, although everyone has to be covered. It also has to be about bringing the costs down across the board. You inject technology and the market forces into the sector.

On Deficits And Debts

The time to reign in the deficit and the debt will come, but that time is not now. Once the recovery is full, the political wind will blow in that direction.
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