Paul Krugman; Nobel Prize winning political hack

All along we've been told Paul Krugman walks across the East River when it comes to economics. Why...because he won a Nobel Prize.

So of course, he is always right and those clueless craven hack Republican politicians in Washington are always wrong.

Sadly, Krugman's opinion of governmental action is solely dependent on the party label of the politician enacting it .

Paul Krugman, October 8, 2007

People claim to be shocked by Mr. Bush’s general fiscal irresponsibility. But conservative intellectuals, by their own account, abandoned fiscal responsibility 30 years ago

Paul Krugman, February 27, 2009

Bear in mind that from 2005 to 2007, that is, in the three years before the crisis, the federal deficit averaged only $243 billion a year. Now, during those years, revenues were inflated, to some degree, by the housing bubble. But it's also true that we were spending more than $100 billion a year in Iraq.

Why is it I doubt an apology to Bush for running a budget nearly in balance sans Iraq  is going to be offerred. Now what was "general fiscal irrresponsiblity" under a Republican president will be a fraction of the structural deficit Obama will maintain long after the present economic crisis abates.  If Obama and Pelosi could propose anything which could generate a 2012 or 2013 deficit within $100 billion of the Bush number I'd be shocked

Why is it "deficit spending" is an Orwellian term for the Democrats; they are always against it, except when they get to do it themselves.

And Ok, my economic education is mostly from the school of hard knocks, but Paul, noone really  buys  two central assumptions in Obama's rose colored deluge of red ink; a) cap and trade taxes will yield a windfall   b) long term federal interest rates will lock in at historic lows.

Maybe Paul if you stop sipping the Kool Aid you'll realize that once fed rates return to economically normal levels the US overseas debt load will result in "Buzz Lightyear economics" --- deficits to "infinity and beyond!". And you won;t have George W. Bush, that incurious Texas cowboy to blame. You'll have economic policies generated by the "best and the brightest"  American liberal Ivy League colleges have to offer.  (It's intentionally ironic I used that phrase; the last time the Ivy League intelligensia were so sure of themselves was during the run up to Vietnam)

I'm not going to dismiss that Krugman is a brighter guy than most, he did see the housing bubble en route . But the bigger point is that when Krugman identified the problem, his political allies made matters even worse.    .  Unlike the old E.F. Hutton ad, when Krugman talks, policy leaders tune out.

The bottom line is that Paul Krugman must know intuitively that the Obama program is going to yield suboptimal economic results, but is cheerleading for it anyway.  And if that doesn;t make Krugman a political hack, well. what would?

I'm not going to assume all 2008 Obama supporters are scamming me about the economy.  Warren Buffett was honest enough to tell his shareholders 

  “the economy will be in shambles throughout 2009 — and for that matter, probably well beyond.”

But Krugman is doing exactly what John Hinderaker predicted in 2005.

Well, if we believed anything Krugman writes, we'd be worried all the time. Or at least until we have a Democratic administration, when everything will be rosy again

The most eloquent words don;t overcome an ideological driven economic agenda based on improbable assumptions and rosy forecasts.  There's no Nobel Prize for propaganda, Paul. If you still want to be treated as a serious academic analyst, stop having your columms read like David Avelrod wrote them. 

====UPDATE====

I found this Krugman article from 2000; written prior to his becoming a full time advocate against George W. Bush and for the Democratic party.  I will let you reach your own conclusions if the 2009 Paul Krugman fits the definition of "hack" established by the 2000 Paul Krugman  

How can you tell the hacks from the serious analysts? One answer is to do a little homework. Hack jobs often involve surprisingly raw, transparent misrepresentations of fact: in these days of search engines and online databases you don't need a staff of research assistants to catch 'em with their hands in the cookie jar. But there is another telltale clue: if a person, or especially an organization, always sings the same tune, watch out.

 

and why did Krugman think some economist went the hack route?

 

 Love of the limelight, love of the feeling of being part of a Movement, even love of the idea of oneself as a bold rebel against the Evil Empire can be equally corrupting of one's intellectual integrity.

Krugman's conclusion

Of course, honest men can disagree, and they can also make mistakes. But it's still a good idea to tune out supposed experts whose minds are made up in advance. Or at least that's what they told me to say.

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Comments

Tedious cherry-picking

John Hinderaker is telling us Krugman is a hack. Oy vey.

Debate the issues. Who cares about the question of whose hack is better than whose? It is just so tedious.

Well, JS: if you admit Krugman IS a hack

then this post wasn't tedious, then was it?

Argumentum ad hominem is still a logical fallacy...

I said I don't care about the question of whose a hack. If we stick to the issues, the hacks will fall by the wayside. There's a reason the argumentum ad hominem is considered a logical fallacy.

Forget the Latin

Until we establish Krugman is a hack he will get away with this sort of partisan drivel.  If you allow the Left to criticise the Right, and play rope and dope; and then accept the bona fides of Krugman et al as "serious thinkers' when they are acting as DNC mouthpieces; then you've basically conceded half the playing field before the ball is snapped.

It's a lot easier to address the issues on a level playing field. If the Left gets to assert they are "reality based" (when they aren;t) and we are "ideologues"; mind explaining how one wins that argument---or even, how the argument  is the least bit useful to the undecided voter.

 

Maybe if we had listened to Krugman in 2005?

"Well, if we believed anything Krugman writes, we'd be worried all the time. Or at least until we have a Democratic administration, when everything will be rosy again"

You are kidding right?

Do you just assume your readers dont READ?

Krugman is STILL worried about the situation and doesnt think we are doing enough.Where are your "rosey" senarios put out by krugman?Oh right they DONT EXIST!

Todays blog by Krugaman;

"Stress test this;"

"An important article by Gillian Tett about actual recovery rates on AAA-rated CDOs. (They’re worse than even the pessimists thought.)"

What world do you live in?

Maybe if we had listened to Krugman in 2005?

"Well, if we believed anything Krugman writes, we'd be worried all the time. Or at least until we have a Democratic administration, when everything will be rosy again"

You are kidding right?

Do you just assume your readers dont READ?

Krugman is STILL worried about the situation and doesnt think we are doing enough.Where are your "rosey" senarios put out by krugman?Oh right they DONT EXIST!

Todays blog by Krugaman;

"Stress test this;"

"An important article by Gillian Tett about actual recovery rates on AAA-rated CDOs. (They’re worse than even the pessimists thought.)"

What world do you live in?

The one where people use one side of their mouth

If we are going to need to spend more money to fix banks, we aren;t going to be able to meet Krugman's rosy predictions and we , ipso facto, should be spending less money on political favors to the Democratic party.

Perhaps you could, eh READ, the links in my article to the AP stories about the economic fantasy land Krugman presented in his 2/27 article.  Are you telling me , hmm, he changed his mind overnight?  That's credibility for you. More like CYA.

True enough

The Nobel committee made no secret that their selection of Krugman was for political reasons; ie that he opposed President Bush.

Being a sideman is a bit different than fronting the band.

Krugman's Nobel will tarnish over time.

Our lot is to accept the times in which we live.

Things change.

Attacking Krugman right now doesn't carry much currency.  Nor does agreeing with him, mind you.  It will all come out in the wash. 

What bothers me about Krugman, PT

is he's too bright for this nonsense. I'm wondering if he has some self-esteem problem if a Nobel Prize didn;t place him above launching schoolyard insults at a political figure. Does he crave acceptance from the political class that badly to demean himself in this manner?

At a time when we desperately need good rational economic reasoning this guy wastes his time and ours with cheerleading and insults. If I were as prominent as Krugman, I'd have too much self respect than to be used in this role by a bunch of Chicago politicians who weren't fit to carry my briefcase.

  

And when the cheerleading and insults

And when the cheerleading and insults come from Rush, does it also bother you? Do you ponder Rush's self-esteem problems??

Rush will be very flattered

I suppose you will buy him a plane ticket to Oslo to pick up his Nobel Prize, right?

Really, I don't get Krugman. Why does he want to be a poor version of a comedian like Keith Olbermann anyway?  

Have I got this right?

You are saying that becasue a group of Norwegians gave Krugman an honor that he did not deserve, when he engages in insults and cheerleading it is reprehensible. But when anybody else does it, it is OK?

If you are willing to submit Krugman is an entertainer

yes. Then he should be given no greater credence on economic issues than college dropout Limbaugh  

Well everything that Rush says is given enormous credence

Well everything that Rush says is given enormous credence by his army of listeners, so, I guess you are saying that everything that Krugman says should be given enormous credence by his readers.

Krugman is a science pop star

Krugman is simply doing what Carl Sagan did for cosmology and James Burke did for analytical history, or Marlon Perkins/zoology, or Jacques Cousteau/marine biology, et. al. . He is popularizing in the mass media a very complex science so that it is somewhat comprehensible and enjoyable for the untrained masses.

Once you get to Nobel prize level there are very few challenges left in the highest realms of academia. The guy is just having fun and giving himself a damn good reason to get up out of bed in the morning and get out of his pajamas.

Even if you totally disagree with him, the fact that you gave his ideas enough mental exercise to understand and oppose means he has done what he intended to do. He made macroeconomics a small part of your daily concerns.

Hate on the guy all you want. It's still better than worrying about Brangelina or OctoMom.

Still the same man

I remember years ago when Elvis Costello was hammered for allegedly racist comments.

In restrospect, you have here an Irishman trying to make sense of race issues in America, and using his own experience with discrimination to try to comprehend it.

The years have vindicated Elvis Costello.  Once again he is taken as a serious musician (more seriously than before, actually).  But his youthful transgressions are not forgotten.

The irony is that while Costello made an earnest effort to understand, his detractors refuse him the same courtesy.

Now, I went through this to draw a contrast.

Krugman is the same as the youthful Costello.  His voice is much bigger than his world experience.

Where I come from, it's called giving a man enough rope to hang himself.

And hang himself Krucman surely will.

He's too fascinated by that rope.  He can't help himself. 

EC is an entertainer

whom I recall got slapped by some female singer right after he mouthed off.  And that was, yes, years ago.  Live and learn.

Krugman  is acting like a clueless entertainer now in real time. And frankly, I'm not likely to have his stuff on an I-pod, unlike  this   

It does sorta explain my world view "I used to be disgusted...now I try to be amused..." 

I'm all for it

I would love to hear about Krugman getting slapped by a female singer.

;) 

Wonder if Olbermann would put that on his show!

It sure would be on Hannity and O'Reilly!

Elvis Costello

There was nothing 'allegedly' about Costello's comments. He wasn't trying to make sense of the race issue. He was having a drunken argument about insipid American pop music (correct, but it's a stupid point since 95% of pop music stinks no matter what age) at that time with American musicians and was trying to 'win' his arguement by provoking a fight. That's just drunk thinking.

The years did not vindicate Costello...he didn't need it. The man was a recognized giant during the 70's and 80's already. I remembered. I was there. The later years...eh, you can only be a raging young man for so long.

As for the analogy, it doesn't hold up. Krugman has already pointed out that he doesn't think the stimulus is big enough. That's not cheerleading. I really don't see Krugman staking his reputation on any administration. Why would he do that? He doesn't work for them.

other way around

I'm wondering if he has some self-esteem problem if a Nobel Prize didn;t place him above launching schoolyard insults at a political figure.

Acually, it works the other way around.  Once a person has a Nobel Prize, then the gloves really come off because the person has already reached the pinnacle of his/her academic field.  There is no need for the recipient to pretend to be objective anymore, because his/her reputation is already solidly secure.  I see it with the physical sciences too: once a scientist wins a Nobel Prize, for a large proportion of them, it seems that now they are free to go champion some nutty cause.  Hey, doesn't our current nutty Energy Secretary have a Nobel Prize?  Case in point.

Ironman, I do believe the

Ironman,

I do believe the Obama and his economists are painting a rosy picture. Both parties do it. And it sets up a big let down. I think Obama is predicting 4% economic growth in outlying years. Very hard to tell with so many things wrong with the economy today. Bush also predicted in 2007 a balanced budget in 2012. We know that won't happen. They all give rosy scenarios and do not account for recessions (we could have a double dip recession) or other factors.

I wish they all would stop their predicting and just get on with business.  

How rosy?

I watched the Obama budget team -- Orsag and Romer -- at a news conference defending their budget projections.  The 4% growth is not a long run projection, but the projection for the best recovery year.  Romer pointed out that recoveries have large growth years like that.  There was 10% growth in 1933 (might have the numbers off by one or two).  Their long term projected growth rate was 2.5%.

Don's assume dishonest projections just because Bush did them.  Clinton projections proved to be conservative year after year. 

Putting politics aside. I

Putting politics aside. I don't know of any president that can make a prediction on economic growth. I guess they have to do it as a guideline, but especially today with all the problems today, I just don't know. As I said before, I fear a double dip recession as we are printing the money and will create inflation in outlying years. To correct that would be higher interest rates. We are outsourcing jobs and the cities and states are losing revenue. Also it will be interesting to see how much big government will effect the private sector.

On the other hand you can have faster economic growth with inflation and with the borrowing of money, but how long will that last. And that would be wrong in the first place. There are so many unknowns.

Now I am going to talk like a republican. If 4% economic growth is achieved, that is the opportune time to cut spending.

 

yeah, 2.5% is about average

for the past fifty years. which makes it automatically unrealistic. ;-)

10/10/08 changed everything.

Nobels are always "political".

Where have you been?

Guess who wrote the mathmatical formula that got us into this mess?

Wired:

For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.  

David li was one of the people up for the nobel prize.

He was wrong.Dead wrong.

Krugman was right.If the collapse had happened next year who knows.....

I think Li might have been a "plant" myself

He is back working in Beijing now. Convenient.

Notice Chris Dodd and Barney Frank didn;t listen to Krugman. So why are they still running the Banking Committees?

OK, now I'm confused.

Are people or are people not supposed to listen to Krugman?

Make up your own mind!

Who called it right and who called it wrong.

Roubini and Krugman were  right.

Others were drunk on easy cash.I like the ones who were more right than wrong.

but thats me.

you mean feddie and frannie?

Your still not blaming them are you?

They were rather late to the game,no?

Krugman on fannie and freddie;

But here’s the thing: Fannie and Freddie had nothing to do with the explosion of high-risk lending a few years ago, an explosion that dwarfed the S.& L. fiasco. In fact, Fannie and Freddie, after growing rapidly in the 1990s, largely faded from the scene during the height of the housing bubble.

In that case, however, how did they end up in trouble?

Part of the answer is the sheer scale of the housing bubble, and the size of the price declines taking place now that the bubble has burst. In Los Angeles, Miami and other places, anyone who borrowed to buy a house at the peak of the market probably has negative equity at this point, even if he or she originally put 20 percent down. The result is a rising rate of delinquency even on loans that meet Fannie-Freddie guidelines.

 

Please

Yes, there were other factors but if you don;t think the $1T plus of subprime exposure in the Fan/Fred portfolio by mid 2008 didn;t vastly exacerbate the problerm,  then I suppose you and Chris Dodd are in the same camp.  

Krugman also ignores the cause and effect relationship of the CRA on promoting the issuance of subprime loans by commercial lenders. Had they not been made, they wouldn;t have been packaged into toxic CDO's in the first place,

BTW, did Krugman ever discuss the role Robert Rubin and Citigroup played in the Wall Street end of the subprime frenzy? 

Wishful Thinking

Just because conservatives repeats the CRA lie ad nasuem, it will never make it true. If we're to believe commerical lenders were 'forced', mau maued, into loans by scary community organizers, how does it explain banks like PNC?

Does the conservative argument about a conspiracy of ACORN, CRA really stand up to scrutiny? Does anybody really believe a voter registration organization and a law from the 70's caused the downfall of our biggest financial institutions. Geez, the commies obviously wasted a lot of money on weapons if they could have just funded a 1,000 voter registration organizations to harm our country.

I believe this ridiculous meme is kept alive not to convince Americans (since it is soooo stupid), but for their conservative supporters. Can't let people wander off the reservation.

And lets not forget the huge number of sub-prime refis

And lets not forget that a huge number of the homeowners who are currently in trouble or who have already been foreclosed upon got there through REFINANCING their homes to take cash out - CRA had nothing to do with that.  Boston Herald, May, 2008:

Bay State homeowners who’ve lost properties in the foreclosure crisis usually started out with “prime” mortgages but apparently did “cash-out” refinancings and ended up in subprime loans, new research shows.

“Why would any Massachusetts home purchased before (real estate prices skyrocketed in) 2000 suffer a foreclosure in 2006 or 2007?” Boston Federal Reserve researchers wrote in a study released yesterday. “The most likely reason is that the homeowner extracted the equity from the home through one or more cash-out refinances as house prices rose.”

 

 

Not sure on that point

If you refi-ed an old loan you still could bring that as evidence of "servicing the disadvantaged market" to the regulators. 

But don;t listen to me. I only was in-house counsel for a bank during most of the last decade.

That said I will agree with NRN that the refi of performing loans to lower income borrowers proved to be ruinous to all parties concerned. But please, let me know who was going to stop less affluent folks with property appreciation from paying off their plastic with ostensible "home equity". I think the Fan/Fred hearing videotapesfrom '05 give a mild flavor of how Democratic politicians would have reacted at the time to significant limitations on this practice. And I doubt Chris Dodd understands yet why this failed so miserably.

If we don't want Housing Bubble II; everyone needs to be honest about the causes of Housing Bubble I. Pretending watered down lending standards that were urged upon GSE's and banks didn;t significantly contribute to the problem is an ideological fantasy.  We can presume the Democrats will regulate the crap out of the market ; so guess what;--if they fail to address lending standards Bubble II will be all theirs. I'd rather have a sound economy than scapegoats, though.  

If the original loan was prime

If the original loan was prime, how could turning it into a subprime count as servicing the disadvantaged market - how could the homeowner have got the original loan?

Most of the refi's were FHA I observed

The borrower qualified and the LTV was pre-bubble; their income barely hit the 38/30 monthly cash flow standard. When the market heated up it was possible to offer cash-out refi's to pay off the original principal amount of the old loan and using teaser rates, maintain the same monthly P&I. This, of course, didn;t last after the ARM reset. And the borrowers could never have qualified even under FHA underwriting for the loan amount they were subsequently lent.

Now "how does this count as servicing the disadvantaged market"? The Refi lender was usually a different bank than the original lender, that 's how.

I'd like to think everyone of all political stripes can agree this whole concept pretty much sucked. But when it was happening, folks said "look, housing values are going up in the inner city".  It was like the steroid era in baseball--totally juiced.

Exactly. More fees. No economic reality.

n/t

see, I'd call that crooked

and prosecute the bank doing it.

what would you do?

;-)

you and me both. hope you get a chance

to talk lending standards with the relevant parties, as you've got some experience in the area. ;-)

Wrong model

It does nothing to justify pooping in your pants to point out that someone else also pooped in their pants.

In general, mathematical models are inaccurate in the field of economics.  There's a word for this, but I can't recall it right offhand.

Economics is based on human behaviors.  Everyone has to act rationally for any model to have any legitimacy.  In an environment where everything is shrouded, the data suggests that no one acts rationally, except perhaps by accident.

The same problem with profiling for crime:

An 85% chance is a veritable certainty.

Taken five times over:

0.85 * 0.85 * 0.85 *0.85 * 0.85 = 0.4437

Each step is further out on a limb.

Anyway, any person with a casual acquaintance with mathematics can tell you that the numbers 2, 3, 11, et al, can do things that other numbers can't.  If you have on eof those in your calculations, then you had better try it out with other numbers.

In summary, economics is not the study of a mathematical equivalence, but one of human behaviors. 

Someone needs to tell the economists then ,no?

Greenspan learned the hard way no?

Just sayin...

and some people pooped in there pants and others didnt.

I like the guys that dont stink.

Are humans rational?

To have an expectation that humans will act always act rationally is itself irrational.

We are emotional creatures {see latest neuroscience and people who think we rode on the backs of dinosours.}Just sayin......

The Apology

What man would willingly do evil? 

greedy ones.

lustful ones.

there are plenty of men who do evil. Some are more likely to admit it than others.

And sometimes, the evil can lead to good.

Those who stand to benefit

And are willing to act on that possibility.

If there is a benefit to be had as the end...

...then evil is the source of goodness.

Then, a man would only engage in evil for the sake of his own goodness. 

nietzchean or satanic, that.

If I decide to make snuff porn, in that it would make me money -- aka benefit me, then I am engaging in evil for the sake of my own goodness.

It's an interesting philosophy, I have to admit. But I never was much for Hedonism, in the first place.

No

I cite the most famous line, ie "What man would willingly do evil?", from a work that has been famous for over two thousand years, ie The Apology, by a very famous author, ie Plato, and you still don't get it.

That is, you failed famously.

Congratulations!  You just voted to kill Socrates.

Pardon me for any inaccuracies, but this is entirely from memory:

Do not those who do evil tend to do so to those near at hand?  For then it would be an injury to one's person to instruct another in the habits of evil. 

humans never behave using rational decision models

because they are incredibly time-inefficient.