Paul krugman:Lest We Forget

[cal04]

http://www.nytimes.com/2008/11/28/opinion/28krugman.html?_r=1

A few months ago I found myself at a meeting of economists and finance officials, discussing — what else? — the crisis. There was a lot of soul-searching going on. One senior policy maker asked, “Why didn’t we see this coming?”

There was, of course, only one thing to say in reply, so I said it: “What do you mean ‘we,’ white man?”

Seriously, though, the official had a point. Some people say that the current crisis is unprecedented, but the truth is that there were plenty of precedents, some of them of very recent vintage. Yet these precedents were ignored. And the story of how “we” failed to see this coming has a clear policy implication — namely, that financial market reform should be pressed quickly, that it shouldn’t wait until the crisis is resolved.

About those precedents: Why did so many observers dismiss the obvious signs of a housing bubble, even though the 1990s dot-com bubble was fresh in our memories?

Why did so many people insist that our financial system was “resilient,” as Alan Greenspan put it, when in 1998 the collapse of a single hedge fund, Long-Term Capital Management, temporarily paralyzed credit markets around the world?

Why did almost everyone believe in the omnipotence of the Federal Reserve when its counterpart, the Bank of Japan, spent a decade trying and failing to jump-start a stalled economy?

One answer to these questions is that nobody likes a party pooper. While the housing bubble was still inflating, lenders were making lots of money issuing mortgages to anyone who walked in the door; investment banks were making even more money repackaging those mortgages into shiny new securities; and money managers who booked big paper profits by buying those securities with borrowed funds looked like geniuses, and were paid accordingly. Who wanted to hear from dismal economists warning that the whole thing was, in effect, a giant Ponzi scheme?

more at link

[democracy1st]

1. K & R

[w4rma]

2. Huge K&R. Mr. Krugman should be on Obama's cabinet before any of the schmucks he's chosen so far.

Actually, maybe Krugman should replace Greenscam.

[BlueMTexpat]

4. Yes, what I "wanna know" is

why isn't Paul on the team yet?

He fears that the current team isn't thinking "big enough" ... and I'm with him there. There are also too many of the "usual suspects" who helped get us into this mess in the first place. :banghead:

[Misskittycat]

5. He said in a recent interview that he doesn't want to have an Administration job.

He cited a number of reasons, including that he is tempermentally unsuited to it, and likes better what he's doing now.

[BlueMTexpat]

7. Thanks for the update.

:hi:

But he could be an advisor; that would not be a full-time job. I truly hope that his opinion is being solicited, at least.

[bemildred]

3. Yeah, easy money is such fun.

And you can't cheat and honest man, but you treat him like a moron when the chips are flowing ...

[The Backlash Cometh]

6. I had a laugh with my dad regarding Krugman.

My blue dog, Wall Street Journal reading brother and I had a conversation about four years ago. I asked him if he was reading Paul Krugman. He said he only received the Wall Street Journal because it was the most relevant paper when it came to business and offered enough diverse opinions for his taste. The NYT, he said, was too liberal and, by extension so was Krugman. Too liberal for what? I always asked myself. Too liberal to understand economics and business?

So I told my dad, "Hey, did you hear Krugman got a nobel award? Maybe if J- had read him four years ago, his stocks wouldn't be tanking today."

Krugman shows us all what happens when you block out the opinion from progressives. You do so at your own peril.

I'll tell you something else. The reason why so many people were doing so well for so many years, was because they were cheating.

[4dsc]

8. Ponzi anyone?? nt