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Let's not forget that Krugman was one of the chief advocates of the housing bubble (before it popped) and that his "berating of the raters" should begin with an

Let's not forget that Krugman was one of the chief advocates of the housing bubble (before it popped) and that his "berating of the raters" should begin with an apology. http://blog.mises.org/10153/krugman-did-cause-the-housing-bubble/ http://blog.mises.org/10153/krugman-did-cause-the-housing-bu...

tansey 16y ago
That is bunk. That blog article is pulling a few quotes from 2001. In 2001 we had a recession with high unemployment, and lowering interest rates was sound advice. If you find some quotes from 2004 or beyond where Krugman actually advocates policies that would encourage a housing bubble, then you may have a case.
- ksraines 16y ago
  Please see my comment above. You are evidently confused about the history of the housing bubble: it was beginning just as Krugman was making these comments and writing the article I link to below. The burden is, in fact, on you to find a link from circa 2004-6 by Krugman calling for restraint of the bubble whose inflation he advocated so fiercely. See above for a more detailed exposition of this point. Anyways, here is another article from 2002. I don't know how you can get any more incriminating: Quoting Krugman: To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip... BTW, asking for a quote from 2004 calling for the creation of a housing bubble is a bit ridiculous: by then the housing bubble was in full bloom. http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Average_Sales_Prices_of_New_Homes_Sold_in_United_States_1963-2008_annual.png http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Ave... As you can see, late 2002 (when the above article was written) would have been just at the beginning of the disaster. (sorry for the delayed reply; at work all day.)
spot 16y ago
those quotes are all from 2001. that's more than just a little "before it popped". this criticism is worthless.
- ksraines 16y ago
  No, your criticism is worthless. Insofar as you are correct in pointing out where I am correct, I give you some credit. But you fail to appreciate the full scope of my correctness and thus miss the whole point. 1. Consider: who would actually be so buffoonish as to call for the creation of a financial bubble at the peak moment before said bubble was about to burst - particularly when the bubble had reached an historical scale. Krugman is silly, but not that silly. 2. As it turns out, he was calling for the bubble at that crucial moment in history which we now recognize as the actual creation of the bubble. http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Average_Sales_Prices_of_New_Homes_Sold_in_United_States_1963-2008_annual.png http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Ave... Let me spell it out for you: he got what he asked for, when he asked for it. 3. Given that he called for the creation of a bubble, I am willing to assume that perhaps he didn't mean for it to get so over-inflated. But that puts the burden on you to find an article circa 2004 for him saying: stop, I meant only inflate it a little ... Of course he did not call for the creation of the bubble just before it popped. In fact, it is much worse: he called for the inflation of the bubble just as it was getting started. We all know how that ended ...
anigbrowl 16y ago
I'm not a big fan of Krugman, but let's also not forget that we were in a recession at the time of those remarks; when Krugman was saying the Fed should raise interest rates a few years later, and taht the US was addicted to Chinese treasury purchases, libertarians scoffed and called him an alarmist. This 2005 example of libertarian economic thought is particularly ironic, arguing that measures of inflation like CPI give too much weight to housing and car prices while an adjacent advert promotes a book explaining how the crisis was caused by too much easy money: http://www.cato.org/pub_display.php?pub_id=3752 http://www.cato.org/pub_display.php?pub_id=3752 Other sparkling jewels of economic wisdom include his prediction at the beginning of 2008 that recession was a non-issue, or his comments from earlier in the decade (when the Fed had raised rates a bit) that the nation would achieve substantial long term benefits from the 'glorious housing boom' created by previously low rates, which had allowed many refinancers to invest and consume more. Physician, heal thyself.
- ksraines 16y ago
  Point taken. However, Krugman's comments were a little stronger than what you suggest. He explicitly called for the creation of a housing bubble (see my other response below). Please don't take the link as a blanket endorsement of libertarianism; it was just the first link that came up as a result of my google search. I remembered reading up on Krugman's predictive failures many months ago ... Krugman stopped being an economist a long time ago and is now a political hack - regardless of whether or not he has a point in this particular instance. I imagine that you didn't need Krugman to tell you that the raters were issuing ridiculous ratings ...
  - anigbrowl 16y ago
    political hack no disagreement there. It's just I think the same is true of some of his loudest critics :)
    - ksraines 16y ago
      Nice.

tansey 16y ago

That is bunk. That blog article is pulling a few quotes from 2001. In 2001 we had a recession with high unemployment, and lowering interest rates was sound advice. If you find some quotes from 2004 or beyond where Krugman actually advocates policies that would encourage a housing bubble, then you may have a case.

ksraines 16y ago
Please see my comment above. You are evidently confused about the history of the housing bubble: it was beginning just as Krugman was making these comments and writing the article I link to below. The burden is, in fact, on you to find a link from circa 2004-6 by Krugman calling for restraint of the bubble whose inflation he advocated so fiercely. See above for a more detailed exposition of this point. Anyways, here is another article from 2002. I don't know how you can get any more incriminating: Quoting Krugman: To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip... BTW, asking for a quote from 2004 calling for the creation of a housing bubble is a bit ridiculous: by then the housing bubble was in full bloom. http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Average_Sales_Prices_of_New_Homes_Sold_in_United_States_1963-2008_annual.png http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Ave... As you can see, late 2002 (when the above article was written) would have been just at the beginning of the disaster. (sorry for the delayed reply; at work all day.)

spot 16y ago

those quotes are all from 2001. that's more than just a little "before it popped". this criticism is worthless.

ksraines 16y ago
No, your criticism is worthless. Insofar as you are correct in pointing out where I am correct, I give you some credit. But you fail to appreciate the full scope of my correctness and thus miss the whole point. 1. Consider: who would actually be so buffoonish as to call for the creation of a financial bubble at the peak moment before said bubble was about to burst - particularly when the bubble had reached an historical scale. Krugman is silly, but not that silly. 2. As it turns out, he was calling for the bubble at that crucial moment in history which we now recognize as the actual creation of the bubble. http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Average_Sales_Prices_of_New_Homes_Sold_in_United_States_1963-2008_annual.png http://upload.wikimedia.org/wikipedia/en/c/c1/Median_and_Ave... Let me spell it out for you: he got what he asked for, when he asked for it. 3. Given that he called for the creation of a bubble, I am willing to assume that perhaps he didn't mean for it to get so over-inflated. But that puts the burden on you to find an article circa 2004 for him saying: stop, I meant only inflate it a little ... Of course he did not call for the creation of the bubble just before it popped. In fact, it is much worse: he called for the inflation of the bubble just as it was getting started. We all know how that ended ...

anigbrowl 16y ago

I'm not a big fan of Krugman, but let's also not forget that we were in a recession at the time of those remarks; when Krugman was saying the Fed should raise interest rates a few years later, and taht the US was addicted to Chinese treasury purchases, libertarians scoffed and called him an alarmist. This 2005 example of libertarian economic thought is particularly ironic, arguing that measures of inflation like CPI give too much weight to housing and car prices while an adjacent advert promotes a book explaining how the crisis was caused by too much easy money: http://www.cato.org/pub_display.php?pub_id=3752 http://www.cato.org/pub_display.php?pub_id=3752 Other sparkling jewels of economic wisdom include his prediction at the beginning of 2008 that recession was a non-issue, or his comments from earlier in the decade (when the Fed had raised rates a bit) that the nation would achieve substantial long term benefits from the 'glorious housing boom' created by previously low rates, which had allowed many refinancers to invest and consume more. Physician, heal thyself.

ksraines 16y ago
Point taken. However, Krugman's comments were a little stronger than what you suggest. He explicitly called for the creation of a housing bubble (see my other response below). Please don't take the link as a blanket endorsement of libertarianism; it was just the first link that came up as a result of my google search. I remembered reading up on Krugman's predictive failures many months ago ... Krugman stopped being an economist a long time ago and is now a political hack - regardless of whether or not he has a point in this particular instance. I imagine that you didn't need Krugman to tell you that the raters were issuing ridiculous ratings ...
- anigbrowl 16y ago
  political hack no disagreement there. It's just I think the same is true of some of his loudest critics :)
  - ksraines 16y ago
    Nice.