Krugman: Market Defies Debt Scolds

Saturday, March 09, 2013

Paul Krugman: Four years ago, as a newly elected president began his efforts to rescue the economy and strengthen the social safety net, conservative economic pundits -- people who claimed to understand markets and know how to satisfy them -- warned of imminent financial disaster. Stocks, they declared, would plunge, while interest rates would soar. Even a casual trawl through the headlines of the time turns up one dire pronouncement after another. "Obama's radicalism is killing the Dow," warned an op-ed article by Michael Boskin, an economic adviser to both Presidents Bush. "The disciplinarians of U.S. policy makers return," declared The Wall Street Journal, warning that the "bond vigilantes" would soon push Treasury yields to destructive heights. Sure enough, this week the Dow Jones industrial average has been hitting all-time highs, while the current yield on 10-year U.S. government bonds is roughly half what it was when The Journal published that screed.

Posted by DRJIMMIES at 09:31 AM | 51 COMMENTS | permalink | Comment on This Entry |

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DRJIMMIES

Joined 2012/11/11
Visited 2013/05/23

Status: user

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O.K., everyone makes a bad prediction now and then. But these predictions have special significance, and not just because the people who made them have had such a remarkable track record of error these past several years.

No, the important point about these particular bad predictions is that they came from people who constantly invoke the potential wrath of the markets as a reason we must follow their policy advice.

Comments

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This clown Paul Krugman know no shame?

Let me save you the reading time.

High taxes and spending work because the market tells me so.
We need more taxes and spending because the interest rates are still low.

#1 | Posted by paneocon at 2013-03-08 11:14 AM | Reply | Flag:

You only wish your sources had as much credibility as Krugman.

#2 | Posted by DRJIMMIES at 2013-03-08 11:16 AM | Reply | Flag:

#2 | POSTED BY DRJIMMIES

I've got a quarter in my pocket that is right more often than Krugman, at least it right half the time.

#3 | Posted by paneocon at 2013-03-08 11:27 AM | Reply | Flag:

"This clown Paul Krugman know no shame?"

Paul Klutzman is a bona fide IDIOT! I choked watching him in an interview when he said he wouldn't get concerned with government spending until it reached 50% of GDP. He's Doc's idol...I think because he's another of those elite PeeAitchDees...and he has a Nobel prize for economics...like Little Caesar Barackus has a Nobel Peace Prize...all cause for worship, right? Doc thinks so, but THIS guy doesn't:

danieljmitchell.wordpress.com

#4 | Posted by jestgettinalong at 2013-03-08 11:30 AM | Reply | Flag:

Please pardon my ignorance, but exactly what in this article is he so dead wrong about? I hear personal vitriol, but no explanation as to what he is in error about?

#5 | Posted by Sezu at 2013-03-08 12:42 PM | Reply | Flag:

"Please pardon my ignorance, but exactly what in this article is he so dead wrong about?"

Paul Krudman is a leftist advocate of big government, big spending, big deficits and damn the national debt. He is also known to attempt to belittle those who don't agree. The statement that verifies his beliefs in this artice is the one where he says...

"Under these conditions, of course, the government should ignore its short-run deficit and ramp up spending to support the economy."

"...short-run deficit..."?????? We've been running deficits as far as the ey can see and under this administration will continue to run LARGER deficits.

"...ramp up spending..."????? We're spending like drunken sailors NOW and the estimate is that we'll have a national debt of $20 trillion by 2016. Government is spending more of our GDP than at any time in history and borrowing 46 cents of every dollar,and he wants it to "ramp up?" Is he nuts!? As I said above, I saw him make a statement that it won't cause him any concern unless it goes over 50% of GDP. He exists on another planet or someting and is a proponent of that "Borrow, tax and spend our way to prosperity crowd." YOU should try doing that and see what happens.

#6 | Posted by jestgettinalong at 2013-03-08 01:09 PM | Reply | Flag:

Get a load of JESTGETTINGALONG's rebuttal of Krugman. JEST got his PhD in economics from Fox News U and did his undergrad work at Rush Limbaugh and Beck U.

#7 | Posted by DRJIMMIES at 2013-03-08 01:19 PM | Reply | Flag:

"JEST got his PhD in economics from Fox News U and did his undergrad work at Rush Limbaugh and Beck U."

No PeeAitchDee, Jimmah, Just a dgree in business and a lotta life experience...together with a little logic. You a PhD in economics too? I'm sorry, I just can't see how someone gets to prosperity by borrowing, taxing and spending? Thankfully, I'm not alone in that capacity, there are others who doubt that policy...some entire countries as well...See how Estonia is doing and how they're doing it.

danieljmitchell.wordpress.com

#8 | Posted by jestgettinalong at 2013-03-08 01:38 PM | Reply | Flag:

Of course you don't, I guess you'd need another BA, this time on history. BTW, keep posting the link to that Cato Institute/Heritage Foundation hack, it adds gravitas to your posts!

#9 | Posted by DRJIMMIES at 2013-03-08 01:51 PM | Reply | Flag:

"BTW, keep posting the link to that Cato Institute/Heritage Foundation hack, it adds gravitas to your posts!"

Just wanted you to know that there ARE folks (and entire countries) who think Krudman is a joke. I understand you and Doc get thrills up your legs when he speaks or when you read his articles, but have you ever noticed how he's so shifty-eyed when he speaks? That dude is spooky...

#10 | Posted by jestgettinalong at 2013-03-08 01:59 PM | Reply | Flag:

well lets see what someone else says....

Why is the stock market doing so well, while most Americans are doing so poorly? Four reasons:

First, productivity gains. Corporations have been investing in technology rather than their workers. They get tax credits and deductions for such investments; they get no such tax benefits for improving the skills of their employees. As a result, corporations can now do more with fewer people on their payrolls. That means higher profits.

Second, high unemployment itself. Joblessness all but eliminates the bargaining power of most workers – allowing corporations to keep wages low. Public policies that might otherwise reduce unemployment – a new WPA or CCC to hire the long-term unemployed, major investments in the nation's crumbling infrastructure – have been rejected in favor of austerity economics. This also means higher profits, at least in the short run.

Third, globalization. Big American-based corporations have been expanding and hiring around the globe where markets are growing fastest – even while the U.S. market is lackluster. Tax policies and trade policies have encouraged them.

Finally, the Fed's easy-money policies. They've pushed investors into the stock market because bond yields are so low. On Tuesday, the yield on the 10-year U.S. Treasury note was just 1.9%.

All of this spells widening inequality in America, because the people who invest the most in the stock market have high incomes. Those who rely most on wages have lower incomes.

#11 | Posted by afkabl2 at 2013-03-08 04:24 PM | Reply | Flag:

www.citywatchla.com

#12 | Posted by afkabl2 at 2013-03-08 04:25 PM | Reply | Flag:

Please pardon my ignorance, but exactly what in this article is he so dead wrong about?
#5 | POSTED BY SEZU

Never a problem, we are all ignorant here. First the market is not responding to stimulus. It is responding to the sugar high of qualitative easing.

Don't try to cover America's uninsured, they told us; if you do, you will undermine business confidence and the stock market will tank.

You would have to have your head so far up a unpleasant orifice not to understand that Obama care IS hurting business and thus the market.

Don't try to reform Wall Street, or even criticize its abuses; you'll hurt the plutocrats' feelings, and that will lead to plunging markets.

Dodd-Frank is a total failure. It didn't eve try to address too big to fail, It has done nothing but to make mid and small size banks uncompetitive and increase compliance costs. The only thin it has done is create a market for US treasuries which are used for capitalization requirements.

Bond vigilantes only exist because people in retirement have to choose bonds to get any return because the Money Market is dead from Fed pump priming.

So we're awash in desired savings with no place to go, and those excess savings are driving down borrowing costs.

RECOVERY? PERSONAL INCOME SEES BIGGEST MONTHLY DROP IN 20 YEARS
Personal income fell by $505.5 billion (3.6 percent) in January, the biggest monthly drop in 20 years, according to the Bureau of Economic Analysis.
www.theblaze.com

Good chart.

PAUL KRUGMAN is the worst kind of scientist. The kind that will twist his findings to match his ideology. His mans writings are not worthy of the bottom of a canary cages IMO

#13 | Posted by paneocon at 2013-03-08 05:20 PM | Reply | Flag:

It is responding to the sugar high of qualitative easing.

BINGO PAN....

YOU DA MAN...

#14 | Posted by afkabl2 at 2013-03-08 07:52 PM | Reply | Flag:

"Obama's radicalism is killing the Dow," warned an op-ed article by Michael Boskin, an economic adviser to both Presidents Bush.

Anyone remotely connected with the economic policies of W needs to shut the hell up.

#15 | Posted by 726 at 2013-03-09 10:05 AM | Reply | Flag:

Krugman's assertions are all consistent with facts on the ground, unlike the fairy tales put forth by bought and paid for pundits and political shills for the 1%. Class warfare against labor remains a tremendous success and a major cause of economic stagnation. The $16 trillion doled out to fraudsters and gamblers remains out of circulation. They have no reason to invest since there is no demand. Had that money, created out of thin air by the Fed been helicoptered to working people and victims of the greedmiesters, instead of greedmiesters, it would be circulating and thus producing a recovery.

As Krugman points out, this country and Europe are run by people who do not understand how the economy actually works.

#16 | Posted by nutcase at 2013-03-09 10:11 AM | Reply | Flag:

Obama care IS hurting business and thus the market.

Your rhetoric will not change the fact that corporate profits are at an all time high.

www.theatlantic.com

#17 | Posted by 726 at 2013-03-09 10:12 AM | Reply | Flag:

#16 Bingo.

#18 | Posted by 726 at 2013-03-09 10:13 AM | Reply | Flag:

has afkabl2 learned something?

#20 | Posted by nutcase at 2013-03-09 10:23 AM | Reply | Flag:

The market has made nominal new highs, but corrected for inflation, they are still well below the 2000 and 2007 highs. The Dow's new high is kind of silly, anyway, it's only 30 stocks and they pick the winners and discard the loses. Plus 3 stocks have made up 30% of the increase from 2009. I'm more interested in the S&P 500 and whether it will make new highs.

#21 | Posted by LEgregius at 2013-03-09 10:32 AM | Reply | Flag:

leg is correct, all we are witness to is the effect of giving so much money to Bankers, who have no place else to put it but the stock market.

Deliberate high unemployment remains the central problem, which is being ignored, contrary to law (Humphrey-Hawkins). Dimon has admitted the big banks make a killing on these catastrophies

#22 | Posted by nutcase at 2013-03-09 10:39 AM | Reply | Flag:

As a wise man once said---it ain't over until it's over. The fat lady hasn't sung yet but she's warming up. These aren't normal markets and we will pay for all the poor policy decisions both fiscally/monetarily. For those with a bad memory; remember the "good" market under Bush. That market was also supported by out of world fiscal and monetary spending---anyone remember how that turned out. Also, that stock market lasted 63 months; this one 49 months (getting long in the tooth). With every Ponzi scheme, in order to keep it going you have to print ever more money. This will come to bad ending. You can count on it since these markets aren't built on free markets but manipulated markets.

#23 | Posted by matsop at 2013-03-09 10:46 AM | Reply | Flag:

As Krugman points out, this country and Europe are run by people who do not understand how the economy actually works.

#16 | Posted by nutcase at 2013-03-09 10:11 AM | Reply

Keynesian economics---I don't think Mr. Krugman has a clue how economics works.

#24 | Posted by matsop at 2013-03-09 10:49 AM | Reply | Flag:

Keynes-Greatest British Economist followed by Reagan and Nixon

Galbraithe-Greatest US Economist, also deceased, although his son has followed in his footsteps. Their advise is being ignored. Official policy is sacrifice the 99% for the sake of the 1%.

#25 | Posted by nutcase at 2013-03-09 11:00 AM | Reply | Flag:

#25 | Posted by nutcase at 2013-03-09 11:00 AM | Reply |

And the ultimate irony is that in the end the banks may not be saved. The notional derivatives they hold is in the trillions and even though the "stress tests" say they're solvent; I don't believe it for a minute. The best thing would be for the banks to go under along with the Federal Reserve----only then will the 99% and main street rise again.

#26 | Posted by matsop at 2013-03-09 11:05 AM | Reply | Flag:

"Keynesian economics---I don't think Mr. Krugman has a clue how economics works."

Keynes wasn't a nut...Klukman is. Keynes' underlying principle has only been HALF observed. He believed that government spending (lowering, not raising taxes and not Obama-style spending) would stimulate an economy in bad times and then raising taxes and using surpluses to pay any debt incurred during the recession. Problem has been that we've never observed part II...you know, the part about paying any debt. Consequently, Krugman and his acolytes are backasswards from Keynes. They want to raise taxes, borrow, and spend, spend, spend and then will use any surplus (if we ever get one) to create new programs while debt keeps piling up. BOTH parties are guilty and this administration has taken has taken it to stratospeheric heights.

#27 | Posted by jestgettinalong at 2013-03-09 11:06 AM | Reply | Flag:

There are potentially 4 fixes or a combination of the 4 to fix our deepening governmental financial hole----deficits/debt.

1.More taxes
2.Decrease the rate of spending increases over time.
3.Growth
4.Inflation.

If you continually increase taxes and decrease the rate of spending increases, growth is impacted and kept low or decreases. Growth is going to be moribund for the foreseeable future anyway since demand is slack. The only answer is slowing down the rate of spending increases over time and the hope inflation rears it's ugly head so all debt is paid with cheaper dollars. It will take years to get out of this situation and by the time it's over, our standard of living will be much lower. Unwinding of debt as a result of too much credit built up over years is a painful process. Just remember----the reason we're in this problem (again) is because of the power of the Federal Reserve and the banking industry.

#28 | Posted by matsop at 2013-03-09 11:20 AM | Reply | Flag:

"...short-run deficit..."?????? We've been running deficits as far as the ey can see and under this administration will continue to run LARGER deficits.
#6 | POSTED BY JESTGETTINALONG

The budget deficit is $200B lower than it was when Obama took office in 2009.

#29 | Posted by johnny_hotsauce at 2013-03-09 11:47 AM | Reply | Flag:

Bernanke seems to have temporarily won the battle against the bond vigilantes. He's put them on the sidelines while he prints the money to buy 90% of new government bonds.

Everyone knows that he can't continue to print money indefinitely and talk of the end game is starting to bubble up. History tells us that central bankers usually err on the side of too much monetization. Then, austerity inevitably comes but it comes at the hands of outside forces.

#30 | Posted by Huguenot at 2013-03-09 11:57 AM | Reply | Flag:

The budget deficit is $200B lower than it was when Obama took office in 2009.

#29 | Posted by johnny_hotsauce at 2013-03-09 11:47 AM | Reply |

Now, Johnny, how in the world can you say that when we've had no budgets to compare it to?

#31 | Posted by matsop at 2013-03-09 11:59 AM | Reply | Flag:

Paneclown squeaks:
PAUL KRUGMAN is the worst kind of scientist. The kind that will twist his findings to match his ideology. His mans writings are not worthy of the bottom of a canary cages IMO

The posted link makes no mention of the source sites explanation for the January drop.

Paneclown laps it up because it supports one of his many delusions.

The 4.0 percent decrease in January DPI mainly reflected the effect of special factors, which boosted employee
contributions for government social insurance in January and which had boosted wages and salaries
and personal dividends in December. Excluding these special factors and others, which are discussed more
fully below, DPI increased $37.6 billion, or 0.3 percent in January, after increasing $38.6 billion, or
0.3 percent, in December.

#32 | Posted by bored at 2013-03-09 12:44 PM | Reply | Flag:

"The budget deficit is $200B lower than it was when Obama took office in 2009."

Then please 'splain to me why the national debt is six trillion dollars higher than it was when he took office. Be sure to suck up another quart of the kool-aid before attempting to answer...

"The federal government will end fiscal year 2012 in a few days (Sept. 30) with a $1.2 trillion deficit -- marking the fourth consecutive year of trillion-plus deficits."

www.factcheck.org

As he has said himself, unpatriotic, immoral, and failure as a leader that he is...go ahead spin it for us now, Hotstuff...LOLOL

"The fact that we are here today to debate raising America 's debt limit is a sign of leadership failure. It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America 's debt weakens us domestically and internationally. Leadership means that, "the buck stops here.' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better." ~ Senator Barack H. Obama, March 2006

#33 | Posted by jestgettinalong at 2013-03-09 01:10 PM | Reply | Flag:

First the market is not responding to stimulus. It is responding to the sugar high of qualitative easing.

How are those two things different?

#34 | Posted by snoofy at 2013-03-09 05:16 PM | Reply | Flag:

Then please 'splain to me why the national debt is six trillion dollars higher than it was when he took office. Be sure to suck up another quart of the kool-aid before attempting to answer...
#33 | POSTED BY JESTGETTINALONG

I suppose that is a question you should ask of the Congressional Budget Office. They are the ones that stated the deficit was lower. They are also the ones that reported Government spending fell by $59B in 2012 compared to 2011. www.cbo.gov

#35 | Posted by johnny_hotsauce at 2013-03-09 07:28 PM | Reply | Flag:

Or you cold finally learn the difference between deficit and debt.

#36 | Posted by TaoWarrior at 2013-03-09 07:57 PM | Reply | Flag:

"But these predictions have special significance, and not just because the people who made them have had such a remarkable track record of error these past several years."

Yeah, I remember Obama's prediction that if the first stimulus bill were approved, unemployment would drop to how much?
Then he blamed his failure on Bush....

#37 | Posted by Diablo at 2013-03-09 10:33 PM | Reply | Flag:

Oh, and as to the thread title? "Debt scolds?"
I guess a national debt totaling more than the entire worth of the nation is not worthy of notice. To raise an eyebrow about it is mere scolding!
Bills come due, and all your piety and wit will not cancel out a single dollar.....

#38 | Posted by Diablo at 2013-03-10 12:53 AM | Reply | Flag:

Even the high Dow numbers conceal a darker truth about inequality and a still-ailing economy beset by bottomed-out interest rates that make bonds unattractive. "Those low interest rates are the sign of an economy that is nowhere near to a full recovery from the financial crisis of 2008, while the high level of stock prices shouldn't be cause for celebration; it is, in large part, a reflection of the growing disconnect between productivity and wages," Paul Krugman writes in The New York Tiimes.

#39 | Posted by DavetheWave at 2013-03-10 09:39 AM | Reply | Flag:

I really respect Obama's call for "redistribution" of wealth. 4 years of this guy has produced the greatest redistribution of wealth in this country-----from the middle class to the banksters and the entitlement class; from the responsible saver to the irresponsible. You just gotta love this guy.

#40 | Posted by matsop at 2013-03-10 10:16 AM | Reply | Flag:

I really respect Obama's call for "redistribution" of wealth. 4 years of this guy has produced the greatest redistribution of wealth in this country-----from the middle class to the banksters

Rigghhhttt. This just started happening 4 years ago. Matsop wakes up, rubs his eyes and pulls his drawers out of his crack. Matsop just started caring when he noticed the president is black.

Look being racist isnt about any one specific comment that you make, we all say stupid stuff. Its about an irrational hatred of a person or group of people.

#41 | Posted by hamsterpants at 2013-03-10 10:52 AM | Reply | Flag:

Look being racist isnt about any one specific comment that you make, we all say stupid stuff. Its about an irrational hatred of a person or group of people.

#41 | Posted by hamsterpants at 2013-03-10 10:52 AM | Reply

And hamsterpants has really shown his stupidity with his offthread comment. Hamsterpants shows his incipient stupidity by not having a clue about Matsop's background----just one little fact (among many); Matsop grew up in a house where his family took in a black teenager from Harlem to live with them.

#42 | Posted by matsop at 2013-03-10 11:12 AM | Reply | Flag:

Matsop, I don't think you're racist but it's never a good idea to demonstrate that you're not by saying you've been charitable to black people or that you have black friends or gasp... a black wife. It's demonstrated, on the internet at least, by the language you use and the sensitivity you show in discussing problems peculiar to them.

#43 | Posted by Hagbard_Celine at 2013-03-10 11:27 AM | Reply | Flag:

#43 | Posted by Hagbard_Celine at 2013-03-10 11:27 AM | Reply |

You're correct; my point is that words (even on the internet) don't mean much. It's how you live your life; not the words you say or post on the internet. It's your actions; not your hypocrisy.

#44 | Posted by matsop at 2013-03-10 11:37 AM | Reply | Flag:

"In the long run, we are all dead,"
John Maynard Keynes

#45 | Posted by paneocon at 2013-03-10 11:46 AM | Reply | Flag:

"It's how you live your life; not the words you say or post on the internet."

Of course. I'd hope at least that word and action were consistent with one another. Especially on an anonymous blog (except for rcade and reitze) where we don't know one another.

#46 | Posted by Hagbard_Celine at 2013-03-10 11:50 AM | Reply | Flag:

46 | Posted by Hagbard_Celine at 2013-03-10 11:50 AM | Reply

Although one has to be able to distinguish "play on words", sarcasm, facetiousness, and irony statements as not being inconsistent with the validity of the importance of word and action in the real world.

#47 | Posted by matsop at 2013-03-10 11:57 AM | Reply | Flag:

"Although one has to be able to distinguish "play on words", sarcasm, facetiousness, and irony statements as not being inconsistent with the validity of the importance of word and action in the real world."

I get that, but not everyone has the skills of a Chairborne, Matsop. ;)

#48 | Posted by Hagbard_Celine at 2013-03-10 12:04 PM | Reply | Flag:

I get that, but not everyone has the skills of a Chairborne, Matsop. ;)

#48 | Posted by Hagbard_Celine at 2013-03-10 12:04 PM | Reply

Sometimes I try----I'm working on it but I hate to admit it, he is good. However, one of the differences is he uses the F____ word and other like words well for affect. I refuse to use the words.

#49 | Posted by matsop at 2013-03-10 12:16 PM | Reply | Flag:

So? Why do you make a distinction that he was black. As I said, we all say stupid stuff but I think thou doth protest too much. Hit a nerve maybe? Who are you telling me or yourself?

#50 | Posted by hamsterpants at 2013-03-10 08:40 PM | Reply | Flag:

Your background is irrelevant. Its your behavior in the here and now that makes it clear to everybody here that you sir are a racist.

#51 | Posted by hamsterpants at 2013-03-10 08:44 PM | Reply | Flag:

Krugman is an idiot, the fed is responsible for the market surge. The printing and spending of billions of dollars each month has raised the stock market, problem is when the fed stops the party will be over. Don't believe me? Why are the billionaires slowly dumping their stocks? Sure is not because the economy is strong, in fact it is not. I sure put a whole lot more faith in the information the billionaires can get rather than Krugman. If he was so smart he would not have to work for a living.

The unemployment situation is deplorable, we have lost 8 million jobs since Obummer became president. If you count all the unemployed the rate is closer to 14%. When this whole thing crashes it will be devestating. Business is reluctant to hire becasue of onerous regulations and increased costs. Of course Krugman does not want to talk about that, nor does he want to talk about the number of college grads that live in their parents home becasue they cannot find a job. Not a pretty picture when you start to dig into it. Just wait becasue any time now the bottom can fall out, and I wonder who Krugman will blame then....George Bush?

#52 | Posted by gtjr at 2013-03-10 10:55 PM | Reply | Flag: