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Tag Archive: paul krugman

Does Fiscal Austerity Reassure Markets? – Paul Krugman Blog – NYTimes.com

Does Fiscal Austerity Reassure Markets? – Paul Krugman Blog – NYTimes.com.

My favorite line from this article is the last one:

“But hey, what are you going to believe: what everyone knows, or your own lying eyes?”

Krugman spends all this time basically analyzing whether it’s a good time to move away from deficit spending and more towards some kind of balanced approach to spending.  I have always thought this was one thing that was ignored by all of the critics when the stimulus package and budget were first being rolled out by the Obama administration.

Specifically, that this deficit spending and all of the activities by the Treasury and the Fed had to happen now, but also had to be temporary.  That the monetary base of the Fed would decrease as it wound down and that the Treasury had no desire to be the owner of AIG or GM forever.  But we had to do this for a while, at the least.

After all of that, Krugman then says that those who push for “fiscal austerity” now have “blind eyes.”  Way to go, Paul.

June 16, 2010 2008 Economic Crisis, Articles from the Web, 0 Read more >

Japan reconsidered – Paul Krugman Blog – NYTimes.com

Japan reconsidered – Paul Krugman Blog – NYTimes.com.

Last night, I did a presentation on part of a case I did in my macroeconomics class about the current economic crisis.  My team’s part was comparing the Great Depression and Japan’s “Lost Decade” with the current situation.  A rather big topic.  

Japan’s crisis is remarkably similar on a number of fronts to our current situation.  One notable aspect, touched slightly upon by Krugman in the linked post, is that of sluggish response.  In particular, it took the whole decade before someone said “let’s just admit the banks are in trouble and do a massive recapitalization.  That was a big move.  

Krugman is concerned that our situation might end up a lot worse than a decade that many economists consider “lost.”  That’s a bad thing to be thinking.  Someone in class last night asked me whether I thought, considering all of the new things the Fed is doing (credit easing, etc) under Bernanke and the stimulus package and possible additional efforts, we were going to get out of this.

Honestly?  If we don’t address the bank issue, I am not sure we’ll see the trough of this recession this year.  Yes, this entire year.  At best, I’m thinking mid-year before we see something.  That’s a while from now…

March 11, 2009 2008 Economic Crisis, Articles from the Web, , , 0 Read more >

Toxic Assets – finally doing something about it

Geithner Unveils Revised Bank Plan – BusinessWeek

Paul Krugman, the economist, wrote a while ago about how one of the factors in any stimulus plan was that government spending alone would not be enough.  The government had to get “toxic assets” (bad mortgages, etc) off of bank balance sheets so that those credit institutions could start lending again.  This is a pretty critical aspect.  Even if it’s just psychological, our lenders are not lending, and our economy is based on 1) consumption and 2) borrowing (because, in general, we never have as much money as we’d like to spend).  The machine just starts to break down at that point.

Jon Stewart, in assessing all the tax problems Obama’s appointments have had, commented that Geithner got through because he’s the only one that can save our economy.  Good first step, IMO.

Oh, btw – key point is that there is going to be a test to see whether banks can really lend or not.  I like requirements for giving out up to $1 trillion.

February 10, 2009 2008 Economic Crisis, Articles from the Web, , , 0 Read more >