The Nation: Krugman predicted this economic collapse:

[amborin]

"....We sometimes, for example, hear it said," writes John Stuart Mill in his Principles of Political Economy, "that governments ought to confine themselves to affording protection against force and fraud"; that people should otherwise be "free agents, able to take care of themselves." But why, he asks, considering all the "other evils" of a market society, should people not be more widely protected by government--that is, "by their own collective strength"? Much like Mill, Paul Krugman likes capitalism's innovations but not its crises and thinks that government has a duty to facilitate the former and protect us from the latter.

He doubts that citizens will get much protection from moguls--or from most economists, for that matter--unless we trouble to grasp how the whole intricate game works, so that our legislators will form a consensus about how to regulate it. Mill supposed that we needed to see "the Dynamics of political economy," not just "the Statics." Krugman knows we need Liquidity Traps for Dummies.


So for the past twenty years Krugman has dutifully mapped the patterns, worried the numbers and issued his warnings--as in (now we can say it) his seriously underestimated book The Return of Depression Economics (1999), a primer on the financial busts of Japan, the Asian "tigers" and Latin America, transparently meant to caution Americans about their own vulnerabilities. He could not have chosen a worse time for prophesy than the end of the millennium. Technology markets were booming, Google was just a year old and Enron was voted a Fortune "Most Admired Company" (for the fourth consecutive year). Meanwhile, a budget surplus was accruing, and the Clinton White House, the Federal Reserve and Congress were all in agreement that, say, regulating "credit default swaps" would be an insult to the professionalism of investment bankers.

What about the problems that had recently hobbled other economies? Would not Wall Street rehearse Japan's recession? Then again, most thought, what did the Japanese, with their computerless offices and hierarchical keiretsu, have to do with entrepreneurial, Lotus Notes-enveloped us? Mexico's politically inbred financial institutions? What board member of an American insurance company--wired with information, faithful to shareholder value--would allow its executives to underwrite high-risk bets, or indeed any transactions...."

<snip>

<http://www.thenation.com/doc/20090223/avishai?rel=hp_picks>

[ShortnFiery]

1. Too bad the guy does not "play well with others."

:shrug:

[SoCalDem]

5. I have no Nobel Prize, and I predicted it too..so did many here at DU

When you have grifters, frauds & crooks in charge of the money, it happens every time there's a "supply", just waiting to be grabbed up.. Every 20 years or so it's happened, and every time , "some people" are SHOCKED, STUNNED and CONFUSED..:eyes:

Look for the republican administrations, and you will find financial collapses....like clockwork... They try to time it, so that they get the money OUT, just vefore they get booted out...and after dems have cleaned it all up, and re-stocked the money-pot, they come roaring back into office to steal the next batch..

[glitch]

8. Ain't it the truth. They we can figure, but the people who vote for them??? What is their problem?

It can't be simple ignorance. Even the ignorant can be wary about their own self-interest.

What is the deal with the idiot republican voters, what makes them so gullible? Is it really that they are driven by fear and their masters know how to tap that? Too bad we can't tap their fear as an alternative energy source, we'd be self-sufficient for decades to come.

[PurityOfEssence]

17. Translation: "doesn't play well with Obama"

Perhaps our President is the mega-genius and penultimate pragmatic achiever so many seem to think, and he's made some very good moves, but he's still untested and unproven. Krugman, although not infallible, has been incredibly prescient.

Krugman has problems with Obama and has stated them. That seems to be the problem on this board with his detractors: he's not "with it" and he's somehow ruining the party by not oohing and ah-ing along with the fold.

Personally, I'm rather queasy at entrusting our salvation to the likes of Geithner, Summers and (yikes) Donaldson. It's good to see the net thrown wide and including people like Volcker, but let's see how it all sorts out. This is scary.

What's alarming about much of the defensive derision leveled at anyone who criticizes the Administration is that ANYONE who doesn't swoon in unison is somehow evil and wrong. People who can't brook dissent tend to fail.

[HiFructosePronSyrup]

2. Didn't everybody?

[amborin]

3. No, actually, save that guy in nyc, forget his name now, mr. doom nickname

[Ikonoklast]

14. Roubini.

Schiff did too, and was soundly pilloried for it.

[amborin]

16. yes, that's the guy, thanks

[Oregone]

6. Not really. He was on the ball a long, long time ago...

I was ready his stuff before I decided to emmigrate. That was many years ago, when the boom of the housing industry just started to become deafening.

[glitch]

10. How is Canada?

I've often dreamed of moving to B.C. Love Vancouver, the Sunshine Coast and the Thompson River which tried to kill me, twice.
Or did you move east?

[Oregone]

12. I headed north to BC. Its beautiful and a lot of fun too...

We came in during the BC 150th celebration. There were big free concert with some popular artists in front of their Parliament building. There are activities going on every week and a ton of facilities for kids. These people know how to celebrate. Victoria is amazing (but expensive). This next summer they are going to be doing constant stuff for the olympics (the torch deal is starting here too, and they'll do another festival). We couldn't be more entertained to be honest, and its so easy to adjust, coming from Oregon.

Unfortunately, they are about 2 years behind the US in terms of economy, and in denial about it. The housing market is starting to "freeze" (high inventory, but prices barely down). The unemployment here went from 3.6% to 4.1% in a month. I think they are going to get hit fast and dragged into this hole with the US. Its sorta sad, since they really had a sound approach to management, but thats the consequence of not diversifying.

[glitch]

13. Ooo, that is sad. Denial is a killer, as we can attest.

Well, maybe by the time they hit the wall we'll be coming out it (I know, I know, don't say it) and it won't be so bad for yous guys.

Gosh, I am envious. Vancouver Opera, Buschart Gardens, Whistler, not to mention genuine old growth forests. I am glad you are enjoying one of my favorite places on earth! A little sad for me though ;)

[Dawgs]

Yes.

:hi:

[Dawgs]

7. Yes.

:hi:

[walldude]

11. Actually I saw a few people predict this and I saw some of them

laughed at and called loony on CNN and FAUX. Wonder when the retractions are coming. Or how about that genius on CNBC who told everyone to hang on to their Bear Stearns stock because they were doing so well. That was the day before they collapsed.

The people who predicted this were laughed at and derided.

[Greyhound]

4. K&R We're getting closer. n/t

[kenny blankenship]

9. But we need the people who caused the disaster in there to instruct Obama on how to fix it!

Just trying to help the other side.

[GeorgeGist]

15. Fair enough but Krugman doesn't see the problem.

Profits are an extravagance the economy cannot afford and remain healthy.