The progressive mindset is a curious one, as evidenced by New York Times columnist and Nobel Economics Prize recipient Paul Krugman.
Krugman appeared on MSNBC's Sept. 23 "The Rachel Maddow Show" and lamented that the Obama Administration missed the opportunity the recent financial crisis offered to fundamentally change how the American economy operates. Host Rachel Maddow asked Krugman what the Great Depression taught economists when it comes to avoiding a repeat.
"It taught us a lot about how to avoid one, which is that you really have to, have to put some constraints. I mean, it sort of roughly, banking is very useful but extremely dangerous and banks have to have all kinds of - you know, fencing put around them as a protection. They have to have some guarantees so that we don't have bank runs, so people know their money is safe. But then, we also have some regulation so that bankers don't take huge risks with other people's money on a ‘heads I win, tails you lose' basis."
According to Krugman, some of those lessons have been forgotten.
"We forgot all of that," Krugman continued. "The short line about how we got on to this crisis is we forgot what our grandfathers learned at great expense. Getting out of - now that we're in the mess - that's much harder. I mean, the last time we got out of it with a world war, which is not something we hope to repeat."
Still, Krugman spoke wistfully of the massive government intervention that World War II facilitated.
"It was an enormous physical stimulus," Krugman said. "It was, you know - we're getting all worked up about Obama who would be spending at max about 2.5 percent of the gross domestic product. World War II, of course, was more than 40 percent of gross domestic product at its peak. So this is trivial stuff that we're doing now. Luckily, it's not confronting a Great Depression."
Worst of all, America's economic amnesia was having an impact on Krugman's own well-being, he told Maddow.
"But I get depressed sometimes about the Depression because the lesson of the Depression seems to be that getting out of this sort of thing requires efforts on the scale that is outside the realm of what's politically discussible right now," he said.
The regret: Krugman fears the federal government didn't adhere to the battle cry of White House Chief of Staff Rahm Emanuel, and let the opportunity to campaign for a government intervention in the private economy "go to waste."
"You know, the Rahm Emanuel line, ‘Never let a crisis go to waste?' But you know, it's starting to look like we did," Krugman said. "And now, things are not good. Unemployment is high - it's still rising. But the sense that we have got to act because otherwise the world might end is fading away and that makes it very hard to do stuff."
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The guy has a leak in his
September 24, 2009 - 09:41 ET by mattmThe guy has a leak in his attic.
Typical libs - they cause the problem, make it worse with their own solutions and then try to solve it with more of what caused it. How such ignorant and insane people get into positions of power and influence is one of the great mysteries of life.
The problem with spending as stimulus
September 24, 2009 - 10:08 ET by KC MulvilleA thriving economy requires two things: (1) promising opportunities, and (2) resources to invest in them.
Instead, the problem was fear. No one knew where the mortgage crisis would go, because the prices refused to stabilize. The banks had resources, but they were afraid to invest them. Fear was the problem. When Greenspan warned against irrational exuberance, he might as well have generalized it; Wall Street is simply irrational. They're more emotional than prudent and cautious. The stimulus was a treatment to the wrong disease.
My friends who work in the market all say the same thing: Wall Street isn't a bunch of aggressive risk-takers. Wall Street is a pack of fear-ridden lemmings, who are driven more by fear of loss than hope of success. They panic at the meekest "boo." And when they heard a pretty loud boo, they ran like liberals at a fair debate.
Krugman wanted to exploit that fear. He wanted to propose economic changes that people wouldn't have wanted, but they would have fallen for them out of fear. Typical - he wanted to catch people when their emotions clouded their reason. Isn't that the definition of anti-intellectualism?
Paul Krugman is just
September 24, 2009 - 10:12 ET by fitzfongPaul Krugman is just another example of how "higher" education, journalism and the Nobel Prize have become corrupted. The fact that he lectures at Princeton, writes for the New York Times and has won a Nobel Prize does not elevate him so much as it taints them.
"I spent a lot of money on booze, birds and fast cars. The rest I just squandered." -George Best
"But the sense that we have
September 24, 2009 - 10:29 ET by d1carter"But the sense that we have got to act because otherwise the world might
end is fading away and that makes it very hard to do stuff."
We are dealing with some sick, sick people. With Kruggie on Madow's show, he felt comfortable pulling the curtain back a bit on the progressive agenda. Kruggie, Emanuel and BO are willing to bankrupt the country so that they can restructure it.
Equine Excreta
September 24, 2009 - 10:44 ET by slickwillie2001Odd, no mention of corruption at Fannie Mae and Freddie Mac, or the problem that government cannot regulate itself. No mention of the corrosive effect of CRA on the financial community. No mention of the fact that the democratics in Congress are so thrilled with the effects of the CRA that they are working on an update of that odious piece of 'legislation'.
All these omissions are indications of a worthless and biased piece of journalism.
Krugman
September 24, 2009 - 11:00 ET by realpatriotIs just a terd with a tie.
He is the one who suggested that speaking out against Obama is dangerous and will insight violence, maybe we need to put him on a committee to investigate the violence associated with rap music or violent video games, oh wait that is artistic expression covered by the 1st amendment, excuse me.
Gaddafi likes him, what more do you need?
Such a fool!
September 24, 2009 - 11:39 ET by CobraMan"I mean, it sort of roughly, banking is very useful but extremely
dangerous and banks have to have all kinds of - you know, fencing put
around them as a protection."
Krugman, you're such a fool! it was this exact belief that lead to the Great Depression! People thought that the banks were too vulnerable, to great a risk, that there wasn't enough protection, and withdrew their money in massive amounts, massive withdraws which lead DIRECTLY the collapse of those banks and our economy. What you're doing is instilling that same fear into America again.
Why are you doing this? Do you WANT the banks to fail like they did in the 30's? I think that's EXACTLY what you want! Why do you want another Great Depression? Are you a fool?
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The US Supreme Court
This man has a nobel prize?
September 24, 2009 - 11:52 ET by katainkent"But I get depressed sometimes about the Depression because the lesson of the Depression seems to be that getting out of this sort of thing requires efforts on the scale that is outside the realm of what's politically discussible right now,"
um.. what? Could he be less articulate.
Its not trivial stuff. The FY09 budget is lumbering in at 45% of our GDP. Its a lot of freaking money and we're already broke.
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The Emperor, he has no clothes
Well, Krugman is correcto!
September 24, 2009 - 13:22 ET by Gary HallExactly. We need to put an end to governement regulations like these that cause massive housing bubbles that lead to credit crisis when in turn results in a near worldwide shutdown. Not to mention the lives of tens of millions of Americans that were financially ruined:
Of course, Mr. Krugman, it wouldn't hurt to get rid of trouble making lying folks like this, either:
How about a second march on Washington - on the capital - with the sole purpose being to call on Frank's resignation?
(;~/ gary
Krugman, you IDIOT.
September 24, 2009 - 15:51 ET by Tailgunner"But then, we also have some regulation so that bankers don't take huge risks with other people's money on a ‘heads I win, tails you lose' basis."
Krugman, you're either a liar, a moron, or c) all of the above.
What in the HELL do you think the purposes of FANNIE MAE and FREDDIE MAC are??
Barney Frank and Chris Dodd, among others, used FM/FM to GUARANTEE, with other people's (taxpayer) money, federally mandated housing loans to the WORST possible credit risks.
(Banks refer to them as 'NINJA' loans- NO income, NO job or ASSETS.)
Banks make the loans, FM/FM buys them from the banks and holds them as assets.
When the economy tanks and housing prices drop, the NINJA deadbeats default, leaving FM/FM with millions of 'toxic assets'; vacant or foreclosing homes now worth less than their mortgage balances.
Now taxpayers are on the hook for hundreds of billions BECAUSE bankers were FORCED by the 'regulators' to "take huge risks with other people's money".
Heads you win...tails I lose.
Nationalized Healthcare is a DEATH SENTENCE.
Democratic Senator Robert K Byrd is a recruiter and leader in the KU KLUX KLAN-a white supremacist group. Where in the HELL do Dems get off lecturing ANYONE on racism?