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First, the market is made up of all of us seeing similar data and coming to our own conclusions based on our interpretations and self-interest. Second, the mar

by jhulla 11y ago

First, the market is made up of all of us seeing similar data and coming to our own conclusions based on our interpretations and self-interest. Second, the market didn't just crash in 2008, it melted down. There were fears of simultaneous runs on global banks with catastrophic consequences. Bernanke/Geithner/Paulson orchestrated government backstops on money market funds, on Fannie/Freddie debt, on shotgun-marriages between banks, on defusing the credit default swap nightmare constructed by AIG and its counter parties. ZIRP and QE were brought in to juice spirits in the hopes of rescuing growth. 2008-2009 was the end of the financial world as we knew it going back to Paul Volcker. It was nightmare. It was a catastrophic end that many and been predicting for some time. Some saw the writing on the wall by 2005 and were positioning their investments accordingly. Read about the thoughts of Ray Dalio, Stan Druckenmiller, or Jeremy Grantham. Since 2008-2009, we're now in a whole new regime. Perpetual QE + ZIRP is not in ur economic textbooks and I do not believe our models can tell us what is coming. We had an opportunity when things were stable in 2010 to find a sustainable path forward. Instead, worldwide, we've just taken regular hits of QE.

Amezarak 11y ago
> Perpetual QE + ZIRP is not in ur economic textbooks and I do not believe our models can tell us what is coming. That very situation is what Krugman did a lot of his academic work on. So far it's played out mostly like what he and other mainstream economists predicted. You can always say "until it doesn't", but that's the nature of life. We have to go with what we know. It's not as if Krugman wants QE + ZIRP; he'd rather get out of it ASAP with his actual policy prescription (fiscal policy), but he's had to settle for QE/ZIRP. > Yet there are many economists, myself included, who regard this view [that QE will be effective and give us a strong recovery] as highly unrealistic, yet support more aggressive Fed action all the same. Why? First, because it might help and is unlikely to do harm. Second, because the alternative — fiscal policy — may be of proven effectiveness, but is also completely blocked by politics. So the Fed’s efforts are all we have. http://krugman.blogs.nytimes.com/2013/07/27/miltons-paradise-still-lost/ http://krugman.blogs.nytimes.com/2013/07/27/miltons-paradise...
- jhulla 11y ago
  Here is Paul Krugman writing in a book review in 2014: "Almost nobody predicted the immense economic crisis that overtook the United States and Europe in 2008. If someone claims that he did, ask how many other crises he predicted that didn’t end up happening." http://www.nybooks.com/articles/archives/2014/oct/23/why-werent-alarm-bells-ringing/?insrc=toc http://www.nybooks.com/articles/archives/2014/oct/23/why-wer... Then read hedge fund billionaire Druckenmiller's transcript linked in this article below. http://www.bloomberg.com/news/articles/2015-04-10/druckenmiller-recounting-soros-experiences-blasts-fed-policies http://www.bloomberg.com/news/articles/2015-04-10/druckenmil... Then read about billionaire Ray Dalio here: http://www.newyorker.com/magazine/2011/07/25/mastering-the-machine http://www.newyorker.com/magazine/2011/07/25/mastering-the-m... Krugman didn't 2008-2009 coming. Many people did. I think QE + ZIRP saved us from a catastrophe in 2008-2009. Instead of thinking what got us to a point where such heavy-handed financial tools were necessary and moving away from the cliff, we've just used the QE tool over and over again. QE1,2,twist,3. QE in Japan. QE in Europe. The Chinese have yet to openly go down this path. I don't in any way believe that Krugman knows what is coming. (I don't either.)
- jhulla 11y ago
  > So far it's played out mostly like what he and other mainstream economists predicted. Oh christ on a cracker. Mainstream economists should have all taken their PhD diplomas off their walls and collectively shredded them in the fall of 2008. Under the watchful eyes of mainstream economists at the Federal Reserve, the watchful eyes of academics at institutions worldwide, the global financial system melted down. Now, we are to believe that these same folks who couldn't see the 2008-2009 crisis know exactly how to lead us out.

by jhulla 11y ago

Amezarak 11y ago

> Perpetual QE + ZIRP is not in ur economic textbooks and I do not believe our models can tell us what is coming. That very situation is what Krugman did a lot of his academic work on. So far it's played out mostly like what he and other mainstream economists predicted. You can always say "until it doesn't", but that's the nature of life. We have to go with what we know. It's not as if Krugman wants QE + ZIRP; he'd rather get out of it ASAP with his actual policy prescription (fiscal policy), but he's had to settle for QE/ZIRP. > Yet there are many economists, myself included, who regard this view [that QE will be effective and give us a strong recovery] as highly unrealistic, yet support more aggressive Fed action all the same. Why? First, because it might help and is unlikely to do harm. Second, because the alternative — fiscal policy — may be of proven effectiveness, but is also completely blocked by politics. So the Fed’s efforts are all we have. http://krugman.blogs.nytimes.com/2013/07/27/miltons-paradise-still-lost/ http://krugman.blogs.nytimes.com/2013/07/27/miltons-paradise...

jhulla 11y ago
Here is Paul Krugman writing in a book review in 2014: "Almost nobody predicted the immense economic crisis that overtook the United States and Europe in 2008. If someone claims that he did, ask how many other crises he predicted that didn’t end up happening." http://www.nybooks.com/articles/archives/2014/oct/23/why-werent-alarm-bells-ringing/?insrc=toc http://www.nybooks.com/articles/archives/2014/oct/23/why-wer... Then read hedge fund billionaire Druckenmiller's transcript linked in this article below. http://www.bloomberg.com/news/articles/2015-04-10/druckenmiller-recounting-soros-experiences-blasts-fed-policies http://www.bloomberg.com/news/articles/2015-04-10/druckenmil... Then read about billionaire Ray Dalio here: http://www.newyorker.com/magazine/2011/07/25/mastering-the-machine http://www.newyorker.com/magazine/2011/07/25/mastering-the-m... Krugman didn't 2008-2009 coming. Many people did. I think QE + ZIRP saved us from a catastrophe in 2008-2009. Instead of thinking what got us to a point where such heavy-handed financial tools were necessary and moving away from the cliff, we've just used the QE tool over and over again. QE1,2,twist,3. QE in Japan. QE in Europe. The Chinese have yet to openly go down this path. I don't in any way believe that Krugman knows what is coming. (I don't either.)
jhulla 11y ago
> So far it's played out mostly like what he and other mainstream economists predicted. Oh christ on a cracker. Mainstream economists should have all taken their PhD diplomas off their walls and collectively shredded them in the fall of 2008. Under the watchful eyes of mainstream economists at the Federal Reserve, the watchful eyes of academics at institutions worldwide, the global financial system melted down. Now, we are to believe that these same folks who couldn't see the 2008-2009 crisis know exactly how to lead us out.