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vtnext, in all the excitement of his Nobel, his actual economic views (as opposed to his politics, which I completely don't care about one way or another) about

vtnext, in all the excitement of his Nobel, his actual economic views (as opposed to his politics, which I completely don't care about one way or another) about events in the real world have been forgotten. In fall of 2004, as Greenspan started raising interest rates in baby steps (very belatedly - housing was already bubbling up), Krugman was very opposed to those rate hikes. His analogy for the tech-telecom bust was with the post-bubble doldrums in Japan - and it was no time to be risking a slide back by rising rates. In the event, directly as a result of that easy credit policy, we got the mother of all bubbles in housing, which has almost taken the entire financial system down with it. Krugman did not anticipate the bigger bubble that was brewing even as he was advocating continuing 1% interest rates (well below the rate of inflation even then!). Economists like Nouriel Roubini, Steven Roach (then Chief Economist at Morgan Stanley), eminent people like Paul Volcker (Fed Chairman between 79-87), investors like Warren Buffet & Marc Faber all warned about the 2004-7 bubble in housing several times, for many years. Krugman had a very public voice during that entire time, but saw no problems with the Greenspan/Bernanke Fed. It is worth remembering this real world record, as the world fetes his Nobel prize.

gahahaha 18y ago
Krugman in this op-ed from 2004 doesn't seem to be advocating lower interest rates, but simply stating that they are probably coming, and that many people are badly prepared for them. http://query.nytimes.com/gst/fullpage.html?res=9F05E6DD1E3BF933A15757C0A9629C8B63 http://query.nytimes.com/gst/fullpage.html?res=9F05E6DD1E3BF... "A number of analysts have accused Mr. Greenspan of fostering a debt bubble in recent years, just as they accuse him of feeding the stock bubble during the 1990's. Just two months ago, Mr. Greenspan went out of his way to emphasize the financial benefits of adjustable-rate, as opposed to fixed-rate, mortgages. Let's hope that not too many families regarded that as useful advice." One reason why he might have argued for lower interest rates, is that the employment growth during the "Bush Boom" was so dismal compared to earlier expansionary periods. (See: http://krugman.blogs.nytimes.com/2008/08/26/about-that-bush-boom/ http://krugman.blogs.nytimes.com/2008/08/26/about-that-bush-...)

gahahaha 18y ago

Krugman in this op-ed from 2004 doesn't seem to be advocating lower interest rates, but simply stating that they are probably coming, and that many people are badly prepared for them. http://query.nytimes.com/gst/fullpage.html?res=9F05E6DD1E3BF933A15757C0A9629C8B63 http://query.nytimes.com/gst/fullpage.html?res=9F05E6DD1E3BF... "A number of analysts have accused Mr. Greenspan of fostering a debt bubble in recent years, just as they accuse him of feeding the stock bubble during the 1990's. Just two months ago, Mr. Greenspan went out of his way to emphasize the financial benefits of adjustable-rate, as opposed to fixed-rate, mortgages. Let's hope that not too many families regarded that as useful advice." One reason why he might have argued for lower interest rates, is that the employment growth during the "Bush Boom" was so dismal compared to earlier expansionary periods. (See: http://krugman.blogs.nytimes.com/2008/08/26/about-that-bush-boom/ http://krugman.blogs.nytimes.com/2008/08/26/about-that-bush-...)