Krugman doesn’t quite hate the TPP, yet

Seems Krugman would really like to give a wholeheartedly thumbs down to the TPP (this is basically the free trade deal for the Pacific rim countries). This would fit into his pundit liberal leanings – but the economist in him really can’t get past the fact that free trade deals are generally seen as good for the economy.

He has said he is a lukewarm opponent and but doesn't think it is that big of a deal. In his last post on the subject he is starting to get more vocal as he rips into a pro-TPP editorial and says that if that is best the supporters can come up with “this is not looking like a good idea”.

70's weren't that bad -- well for rich folks they were!

Krugman argues the stagflation of the 70's was actually not that bad for the middle-class. The real pain was afflicted on the rich. Not that pain is the right word -- just that the rich did not advance their incomes as much as they were used to. Since the 1970's, however, the rich have been doing fabulously well while the middle class is the segment of society that has not seen their incomes rise as quickly. So when the right instills fear in the electorate about a return to the economics of the 1970's -- there really isn't too much to fear.

Krugman seem the writing on the wall but don't raise the rates yet....

The jobs numbers have been really good the past month and so there is has been a renewed push to start raising interest rates. The Fed says that perhaps, just perhaps, they will start to look at doing that. Krugman says whoa! let's not get ahead of ourselves -- the facts on the ground do show some improvement but the risks of raising rates are not worth it. If rates are raised too early then the economy could fall back into the doldrums like in Europe and Japan. Cheaper money is still needed for the foreseeable future. If inflation does come back then the Feb can always use the tools at its disposable to ramp things down.

Krugman backpedals on his love for Piketty

Rarely has someone praised a book as much as Krugman did of Piketty's book on rising inequality. If you ever need to write a reference or review and need some superlatives quotes, his review is a great place to get ideas! Some nuggets from Krugman's review include: "magnificent", "sweeping meditation on inequality", "revolution in our understanding of long-term trends in inequality", "revelation", "This is a book that will change both the way we think about society and the way we do economics.", "the Piketty revolution", "an awesome work", "rigor of his capital analysis", "sheer, exhilarating intellectual elegance", "masterly diagnosis", "extremely important book on all fronts", and  "transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to."

Wow. Of course, Krugman's positive review isn't a surprise since Krugman has been talking inequality for decades. Now's he's got a big, thick tome from Piketty to back up his thesis.

But hold on -- seems there might be some funny business going on with Piketty's data. The Financial Times uncovered some issues that is making waves. Krugman in a remarkable post acknowledges this and says that Piketty will need to address this and that "we’ll see how well he does it." Quite a change from last month when Krugman said that anyone who sees problems with Piketty's data probably is wrong since Picketty's "done his homework!"  What makes this especially interesting is that Krugman led the charge during last year's economic data brouhaha when two economists were found to have made Excel errors in a well-known paper that claimed high debt levels led to lower growth.

Krugman advocates sustained population growth -- sort of...

Krugman says that you need a growing population to have a growing economy. With less population, while that is better for the environment, also leads to less wealth. There is a way to have a richer society with less population (and its environmental benefits) but this would involve certain economic tools that are not political feasible (such has allowing higher inflation).

Krugman admits he his wrong!

Krugman poo-poos the sense that Europe is back on track. He says while no disaster has happened still the very slow growth is a terrible thing. The back story is that he has been advocating for less austerity for many years but still Europe did not have looser monetary policy. The promise from those in power in Europe is that growth would come from higher confidence in the economy since they kept inflation down but Krugman's point is that growth did not result.

In this same post Krugman also admits that he was WRONG that the euro zone would split up. Back in 2012 he said it would happen in a matter of months.

Class in America and the Rich

Krugman points out that when you hear talk of someone saying we should not engage in class warfare -- they are really just defending the upper class its fight for smaller government. Krugman also goes way back in time (1992) to highlight something he wrote then that shows that the rich really do stay rich and there is not that much income mobility in the past couple decades.

Obamacare update

Now that the initial Obamacare enrollment is in the cards, Krugman has been doing a victory lap on it's success. He is especially gleeful since he admits the roll-out was terrible but that liberals saw the problem and worked hard to correct.

Krugman and his Nobel, Economists who have been wrong, and North Carolina jobs

Krugman writes at length on whether he or other laureates should be given more visibility since they won prestigious prizes. His point is yes maybe they should be given a forum but if they continue to get things wrong then that should be the end of them in the public arena.

It is always fun when Krugman goes back a couple years to look at what people said and then show how now they been proved wrong and he’s been right. In this post Krugman writes how in 2010 Ken Rogoff attacks those who wanted more fiscal stimulus and said that those people who advocated against austerity would be wrong about more recessions. Krugman then breaks out with a chart showing more recessions in Europe since 2010.   

Another favorite topic is when Krugman and the WSJ go mano-a-mano over the same issue. Recently it was over lower unemployment in North Carolina. It seems NC allowed many people’s UI benefits to end. The WSJ pointed out that this eventually lowered the NC UE rate, Krugman doesn't dispute but says the rate went lower since more people just stopped looking for work and thus are no longer counted in the UE rate.

Dem some fighting words!

Not even a week ago Krugman posted that anyone who says he advocated a housing bubble in 2002 to offset the internet bubble of the late '90's is both a fool and liar. So now in today's main editorial in the WSJ  about the legacy of Ben Bernanke did they throw the gauntlet down with this line -- "Mr. Greenspan nonetheless followed the advice of Paul Krugman to promote a housing bubble to offset the dot-com crash."  Precious.

Krugman vs WSJ & Stephens - it gets nasty!

Krugman and WSJ columnist Bret Stephens are in a slug fest. It should be noted that Stephens won the Pulitzer Prize in last year - so this is quite high profile.

It started when Stephens blasted Obama for a economic inequality speech. Not quite sure why Stephens was even writing about this since he focuses on foreign policy but evidently he made a big mistake - he used nominal figures to show higher incomes for poor folk instead of using inflation-adjusted numbers. When using inflation adjusted then there was no increase for the poor. Of course Krugman jumped all over this since he's been focusing on inequality lately. Stephens admitted his error but still said it was an innocent mistake that doesn't change his basic hypothesis that all Americans are enjoying rising incomes, using CBO data to back it up.  Interestingly enough Krugman also uses this data to back his claim that the same data shows rising inequality.

Then for Krugman's regular weekly column his told the story again how Stephens used the wrong data to give proof that conservatives are purposely using confusing data and the WSJ didn't issue a correction. This, of course, send Stephens through the roof and he responded in his regular column that Krugman is bully and why hasn't Krugman issued corrections for saying in 2002 that Greenspan should start a housing bubble or that Europe is an economic success in 2010. Krugman then responded WTF... that was not a correction since it wasn't posted to the original article, just in an on-line post.

exciting stuff!

Krugman is really mad at the Washington Post

This is the just latest time that Krugman has bashed the Washington Post. He can't believe they published a news article that claimed the Ryan/Murray budget deal is a budget buster. He says how the one 'expert' mentioned in the article is really a deficit hawk (not a true unbiased analyst) and why could they have not also gotten a quote from an expert who doesn't believe deficits are a problem. Krugman provides some data from the CBO (Congressional Budget Office) that shows deficits are not a growing concern.

The future, economics and the Great Recession, Cochrane has no credibility -- and a little turkey defense

Krugman tells us he believes that the world could be on the cusp of major technological breakthroughs. Some examples are self-driving cars, good, automatic translation, computer speech recognition, etc. Krugman's post is in response to some people saying technological innovation is coming to an end.

Krugman then has a couple posts defending economics (specifically main street, textbook macroeconomics). He says that this standard economics had a good model for the economic crash and what to do for recovery – namely have governments spend more money while interest rates are very low and other participants in the economy are not spending. He ends one post with quite a zinger saying the problem was not with economics but with some economists who decided to turn their back on standard macro and we should go back and review the old classical economics texts.

For Thanksgiving, Krugman refutes a half in jest post about how people hate turkey because chicken is way more popular. Krugman says bogus – it’s just that chicken is much more convenient…

Krugman goes on quite a riff against John Cochrane who claimed four years that inflation was a danger – but now that no inflation has come - has yet to admit he’s wrong or revise his model. Krugman states quite clearly that this should reduce Cochrane’s credibility.

Mean for the sake of mean and ObamaCare

One thing that really sets Krugman off is when officials take policy positions that cause hardship on people when there is no justification for it. His recent example calls out the head of the German Central Bank for saying that printing money is not the way to get out of the financial crisis. Krugman is flabbergasted since he says there is no grounds for this argument as a higher inflation rate would help alleviate the situation. Krugman can't understand the desire for these officials to cause pain when solutions exist that will not cause pain and suffering.

Krugman points out that the latest estimates are that healthcare costs are slowing and some of this may be due to the implementation of Obamacare.

Also on Obamacare he agrees the roll-out has been a disaster but he feels the technical glitches will get worked out quickly. The big story though is that more and more people are getting access to affordable healthcare and that will be the story that will dominate the elections next year -- so the Republicans if they continue to rail against it will be on the losing side.

Larry Summers is the man and a new I was wrong mea cupla

Krugman is really, really jealous of Larry Summers -- basically at a recent very important economics conference, Summers gave a presentation that knocked the socks off of everyone -- including Krugman. Krugman says he has hinted at some of the points in previous works but Summers but it all together in a way that is now getting a lot of attention. The jist of it is that the economy's current depressed state may be the new normal and the only way to get higher employment is through bubbles. The reason for this is that declining population growth which reduces demand. The only way out of this situation is to force more demand -- through government spending and/or aim for higher inflation target.

It is fun to follow Krugman as he bashes others. Three years ago a number of economists signed an advertisement warning of bad things (inflation) if US government didn't stop spending so much money. Krugman now points out that no inflation happened but rather than saying we should just not listen to those who warned, we should see how they reacted. What's especially interesting is that Krugman points out that he has been wrong over the years and he gives a new example that he has not previously mentioned and it's a response to Nigel's long critism of him. He admits he was wrong on the euro coming to an end - back in mid 2012 he said it would just be a matter of months. Krugman ends his point by pointed out that none of the academics who signed the letter have admitted their error and this is a sign of poor character.

For European recovery higher inflation is needed and Ted Cruz is so crazy that no one dares be crazier!

Krugman continues to pound away at the need for greater inflation in the Euro zone. Interestingly enough the European Central bank actually cut their interest rate which of course Krugman applauded, since that should allow for greater inflation.

Krugman makes the point that higher inflation in the late-90's in southern Europe helped Germany recover from its doldrums. But now Germany is advocated low inflation which will not let southern Europe recover. Krugman calls out this hypocrisy - since Germany is now telling southern Europe to recovery through austerity which it never had to do.

On the political scene Krugman points out that no one wants to be seen at crazier than Ted Cruz. You would expect a wide range of viewpoints but it seems right wing stops at Ted Cruz.

Krugman and inflation

One of things that struck me very early on in my following of Krugman is his counter-intuitive embrace of inflation. Like most of the world I think, I had always assumed that inflation was always evil and the lower the better. Krugman however believes some inflation is good and necessary especially when an economy is in recession. One of his reasons is that it allows debts to reduced automatically since a future dollar (or euro) would worth less than one that is borrowed today. For people who are hugely indebted, unfairly in his opinion (think US sub-prime homeowners or Europeans economies which grew to fast due to German's pushing exports), this allows them to get back to normal spending quicker in order to get economies growing again.

Krugman also has a post where he explains (or should I say shouts!) that he has been right for five years now that stimulus spending and expansion of the money supply would not lead to inflation. He points out two Fed presidents who have admitted they have been on the wrong side of the argument and then ponders why this has not led to more pronouncements from other individuals who have been very wrong about inflation.

Niall shoots one over the bow towards Krugman

Niall Ferguson has a couple long posts where he takes apart Krugman. Basically he calls out Krugman for saying he has only been wrong two times. Niall proceeds to explain in great detail how Krugman said the break-up of the Euro was imminent but yet it has still not happened. Niall wonders why Krugman fails to acknowledge this since this is arguably the biggest issue in international economics in the past 5 years.

Niall then moves on to call out Krugman for not predicting the 2008 financial crisis while Niall gives proof that he/himself did. He then gives a couple examples of Krugman's smugness and impoliteness. He can't believe Krugman has the gall to claim to be right about the importance of stimulus spending when his other predictions did not pan out so why should people believe him?

Niall finishes up his piece by saying that Krugman's lack of civility hurts the economic discourse because people are afraid to oppose him. He published his piece to show how wrong Krugman has been so others can feel safe bring arguments that counter Krugman.

Krugman's response to all this is that he would never respond. I assume that is because he doesn't have any respect for Niall but he really doesn't explain. This is especially surprising since Krugman has gone out of his way previously to call out Niall. Very strange, maybe Niall is onto something?

Contratry to what they think - Republicans don't have new ideas, Obamacare will not give the Republicans victory, you don't need a fancy degree to have influence, and five years of low interest rates and no change in policy

Krugman was on This Week with George Stephanopoulos and couldn't believe that Peggy Noonan said that the Republicans are the party of ideas. Krugman wonders what examples there are of new ideas since if it is Medicare and slashing tax rates for the rich - then those come from Newt!

Krugman also finds someone who is happy with the health-care exchanges. He is surprised the Obama administration messed up the web-site programming but says this will get fixed and most importantly there is no way the Republicans will be able to run against it next year since it will be popular.

Krugman makes it clear he doesn't much care for academic prestige if the person is an idiot or fool. If you don't have fancy degrees but your ideas and work are sound then you will get respect. The degree and reputation will still give you a larger audience but you had better still have good quality work.

Krugman is pointing out that we are coming up the 5 year anniversary of interest rates bottoming out. This, he explains, has enormous implications that policy makers have not grasped. Namely that since you can't force interest rates lower than zero than other fiscal solutions must be tried to try and get the economy growing again. But these other solutions (higher stimulus spending) are not being tried.

Krugman came right out and says it - Republican leadership is 'stupid'

Krugman flat out calls Boehner and Cantor stupid for backing themselves into a corner on the shut down/debt ceiling. He says Obama won't back down, his cave-in over the debt ceiling in 2011 was his worst decision, and he won't repeat that again according to Krugman. Boehner and Cantor are stupid because they know Obama won't give ground and Obama is winning this politically so there is no way Boehner and Cantor can come out of this positively. Krugman's 'stupid' remark is quite noteworthy since he says he never believed George W Bush nor his advisers were stupid just 'incurious' and 'dishonest'.

Krugman ends the post very concerned since he thinks the country / world may pay the price for this stupidity since it could lead to a default.