I was watching this weekend and loved his apple pie comment. He says it like it is without being mean spirited or disingenuous. And he does so in a way that regular people can actually understand.

I have to make the obvious comparison to Obama. Where Krugman is simple and easily understood Obama is a becoming little too flowery. I like the simple. It makes for easier listening and to digest.

Well, the Golden Mean, like Buddha's Middle Way, is not the path of least resistance.

It is the synthesis of a dialectic. That's how Obama uses it, too. I saw him do that over and over during the campaign. He used a dialectic in his national health care ads that ran in New Mexico to make his case that the solution to health care doesn't lie in either extreme - it lies in a synthesis of ideas.

Jughead on Mornin Joke hates him. They all sat around saying the Nobel Prize is now meaningless when he won. The same script, word for word when Vice President Gore won it.

And they had no idea what he won it for. He won it for work done on systems and how they work. It is clear that these idiots are forced to have in on--orders from the top. hahahahaha

I like Krugman. His is an important voice in all of this. But he is not the President. He is not the Secretary of the Treasury. And his voice did not win out.

But his voice was important in the sense that it bore on the final bill.

The only think I am sure of in speaking of economics is that I have no money.hahahaha

I think you've grabbed hold of something important here. And I'm thinking how sometimes a "mean" is nothing more than being dragged down to the lowest common denominator. Not that they're the same thing - but it's the same as trying to design by committee, rather than letting different excellent people have a go at it. There's also the fiction of every issue having two sides, even if 98% of the people like one side and only 2% like the other side.

Last I heard Krugman had agreed to assist the Obama administration. Possibly, as you suggest by providing a counterweight to the arguments of the right.

There is something so tiring about these never-ending nonsensical arguments. Like is Obama or is he not a native born American? Sometimes I feel like we've been put in an amusement park and we're stuck on a ride, which goes round and round, and we're arguing the view from here versus there, when a simple aerial flight in a balloon would show that the amusement park is set in the midst of a landscape with different views. But then, naturally, there would have to be the expert in the air versus on the ground.

There is something wrong with a media that wants to drum up controversy, or magnify it. Because it's coming from the media, no doubt about that.

The synthesis depends on the thesis and sntithesis. If the thesis and antithesis are screwed, then the synthesis is bunk.

The stimulus bill is an axample of a bunk synthesis. The thesis was that government spending on jobs/infrastructure combined with targeted middle class tax cuts was going to patch the ship of state up enough to weather the private sector storm. The antithesis was, "government spending is Godless unless it kills brown people, and only the wealthy understand money so give them more of it."

The synthesis was wacked out because the diagram took the shape of an egg. There was a normal curved ened (the thesis) reacting to an INSANE parabola (antithesis). The synthesis trimmed government spending that could be pigeon-holed as social entitlements, and let corporate tax breaks suck up too much of the oxygen.

The problem is that we are going to continue to submit rational left-leaning proposals, and the right is going to provide batshit antitheticals. The golden mean will leave a portrait displeasing to the eye.

Two words:
Reverse triangulation.

Media has always been entertainment, in that interesting stories are the attraction for purchasing the product.

It is sometimes merely that, sometimes more than that. The constitutional amendment does not preclude it, and only the broadcast licensing requirement of yore, for community-service programming, (along with Fairness Doctrine), were actively directed at making media informative.

So arguments have been found to attract eyeballs, like any fight does.

Like I said, my hat's off to Schiff,

But I called it too. Just 4 years too early, (wasn't on the net then but I could give you my wife's contact info and she'll tell you all about it). I started keeping my mouth shut after that. Alot of us knew it, everything just kept going up and up, defying all logic. I still can't get my mind wrapped around the dizzying heights. I recall thinking I must be totally crazy, i just couldn't understand where all this money was coming from and how it all kept going up and up.

I feel like I have just lived through tulip mania, it just lasted way longer than I thought possible.

I for one don't see Krugman as a jester. We might as well ask what's wrong with Obama, since he's the one who left Krugman on the outside.

Unless they had a conversation in which Obama said, "I need guys like you and Roubini on the outside, to help me triangulate leftward," but somehow I don't believe it was that thought out.

Hi All,

I don't mean to hijack a post with a huge comment, but in honor of today's stock market close (the lowest since 1997) I thought that I would post this 1998 Krugman column on market psychology. It is very illuminating both for how right it is, and how utterly wrong it was. You know what they say about economists...

THE ICE AGE COMETH May 25, 1998

The more I look at the amazing rise of the U.S. stock market, the more I become convinced that we are looking at a mammoth psychological problem. I don't mean mammoth as in "huge" (though maybe that too), but as in "elephant". Let me explain.

If you follow trends in psychology, you know that Freud is out and Darwin is in. The basic idea of "evolutionary psych" is that our brains are exquisitely designed to help us cope with our environment - but unfortunately, the environment they are designed for is the one we evolved and lived in for the past two million years, not the alleged civilization we created just a couple of centuries ago. We are, all of us, hunter-gatherers lost in the big city. And therein, say the theorists, lie the roots of many of our bad habits. Our craving for sweets evolved in a world without ice-cream; our interest in gossip evolved in a world without tabloids; our emotional response to music evolved in a world without Celine Dion. And we have investment instincts designed for hunting mammoths, not capital gains.

Imagine the situation back in what ev-psych types call the Ancestral Adaptive Environment. Suppose that two tribes - the Clan of the Cave Bear and its neighbor, the Clan of the Cave Bull - live in close proximity, but traditionally follow different hunting strategies. The Cave Bears tend to hunt rabbits - a safe strategy, since you can pretty sure of finding a rabbit every day, but one with a limited upside, since a rabbit is only a rabbit. The Cave Bulls, on the other hand, go after mammoths - risky, since you never know when or if you'll find one, but potentially very rewarding, since mammoths are, well, mammoth.

Now suppose that it turns out that for the past year or two the Cave Bulls have been doing very well - making a killing practically every week. After this has gone on for a while, the natural instinct of the Cave Bears is to feel jealous, and to try to share in the good fortune by starting to act like Cave Bulls themselves. The reason this is a natural instinct, of course, is that in the ancestral environment it was entirely appropriate. The kinds of events that would produce a good run of mammoths - favorable weather producing a good crop of grass, migration patterns bringing large numbers of beasts into the district - tended to be persistent, so it was a good idea to emulate whatever strategy had worked in the recent past.

But now transplant our tribes into the world of modern finance, and - at least according to finance theory - those instincts aren't appropriate at all. Efficient markets theory tells us that all the available information about a company is supposed to be already built into its current price, so that any future movement is inherently unpredictable - a random walk. In particular, the fact that people have made big capital gains in the past gives you absolutely no reason to think they will in the future. Rational investors, according to the theory, should treat bygones as bygones: if last year your neighbor made a lot of money in stocks while you unfortunately stayed in cash, that's no reason to get into stocks now. But suppose that, for whatever reason, the market goes up month after month; your MBA-honed intellect may say "Gosh, those P/Es look pretty unreasonable", but your prehistoric programming is shrieking "Me want mammoth meat!" - and those instincts are hard to deny.

And those instincts can be self-reinforcing, at least for a while. After all, whereas an increase in the number of people acting like Cave Bulls tended to mean fewer mammoths per hunter, an increase in the number of modern bulls tends to produce even bigger capital gains - as long as the run lasts. Any broker can tell you that in the last few months the market has been rising, despite mediocre earnings news, because of fresh purchases by ever more people distraught about having missed out on previous gains and desperate to get in on the action. Sooner or later the supply of such people will run out; then what?

OK, OK, I know that this isn't supposed to happen. Sophisticated investors are supposed to take the long view, and arbitrage away these boom-bust cycles. And maybe, just maybe, the market is where it is because wise and far-seeing people have understood that the New Economy can produce growing profits forever, and that the rise of mutual funds has eliminated the need for old-fashioned risk premia. But my sense is that people who try to take a long view have been driven to the edge of extinction by the sheer scale of recent gains, and that the supposed explanations you now hear of why current prices make sense are rationalizations rather than serious theories.

The whole situation gives me the chills. It could be that I just don't get it, that I'm a Neanderthal too thick-skulled to understand the new era. But if you ask me, I'd say that there's an Ice Age just over the horizon.

It says a great deal of the perverse and corrupt context in which our politics is played out these days that Krugman, who as you so rightly have pointed out has been right about just about everything important in recent years, is used as a foil to make bad policies and proposals seem sensible.

I think the question is what's wrong with Obama?

"The man was and is simply a champion for truth."

Sure.

I want to know his truth about negative interest rates, and I want it rationally not fallaciously. Any suggestions?

perhaps some requirements could be placed on this apparent largess from the Fed, to limit "hoardability" of Fed funds.
- yes that was the bit I was trying to get at. Something like making the banks pay to keep reserves at the Fed.

Where is the problem? If you are worried about banks hoarding cash, aren't they doing that already?
- Well, yes they are, and the question then is what, if anything, to do about it. It's not that I'm against your idea - though I have a mental blockage at the idea of paying someone to borrow your money (lol!). It's more that the hoarding doesn't seem to be a simple market effect of thinking that lending out money borrowed at 0% isn't profitable (-and so we need to go into the negatives). It seems to be due to the general panic. The only thing banks or anyone else wants to hold is treasuries - or Fed reserves. Why? Because they've all of a sudden realized their lending practices are dysfunctional, and they end up cutting lending in random and pernicious ways just to reduce risk. They look at their risk models and they're freaking. They don't want more money.

Maybe there is a formal (legal?) argument about negative interest rates. I don't have it :0)