Tuesday, June 29, 2010

Revisiting All-Imbecile Paul Krugman

A reader took some umbrage to my post the other day Paul Krugman, Newest Member of the All-Imbecile Team. In it, I took the long overdue move of adding NY Times columnist and Nobel laureate Paul Krugman to my All-Imbecile Team. The reader submitted the following comment to me:

"he's the nobel laureate. your a blogger. the least you could do is try to refute his argument, rather than just insult him. the fact that you haven't tried to refute his argument actually lends credence to it."

Okay, were Krugman a lowly blogger instead of Nobel laureate would this even the playing field? In an attempt to address the writers concern, I offered this quick, albeit feeble, response;

Yes he is a nobel laureate and yes I am the blogger. Okay, so lets refute his Keynesian argument of spend, spend, spend. Most fiscally sane individuals would argue don't spend what you don't have but not Krugman. Borrow, borrow, borrow. One might even go a step further and suggest you don't solve a debt crisis with more debt just as you don't cure a heroin addict with larger doses of heroin, but not Krugman more heroin please. Mr. Krugman thinks penny pinching is more than cruel it endangers our future. What does one say to his other than insult the speaker as penny pinching is EXACTLY what people with a room temp IQ do when they are in trouble financially. In my opinion, remember now I am an idiot blogger and Mr. Krugman is the nobel laureate, you cut taxes across the board and you absolutely go hog wild cutting entitlements and spending to the point where calling it austerity would be a compliment. I apolgize in advance if you find my refutations of the laureate's arguments too simplistic or shallow. If so, I suggest you continue reading the cerebral horses**t the nobel laureate is spouting.

Maybe if I were a Nobel laureate my words might carry some import with readers.

Either way the story of this economy unfolds, it seems there is a plethora (if I knew what that word meant I would tell you) of candidates for my All-Imbecile Team. Mish over at his fantastic blog Global Economic Trend Analysis submits yet another candidate, unwittingly?, this morning with his post Yet Another Keynsian Clown Steps Up To The Plate: Leo Kolivakis at Pension Pulse.

I am reprinting Mish's post in its entirety as an offering to individuals who, like the fella who wrote me, without a proper and concise refutation would lend credence to the argument (really now!) and actually buy into the hogwash. Below is Mish's, another blogger mind you, excellent refutation of Krugman and all the other Keynsian clowns argument.

The Keynesian clown hit parade just keeps on rolling. Leo Kolivakis at Pension Pulse is the latest to put on the clown hat for The Third Depression?

Some economists are worried about the push to slash deficits too early. In his op-ed piece in the NYT, Paul Krugman goes as far as calling for The Third Depression.

I also fear that policymakers are making a major mistake by moving so aggressively to cut deficits at a time when the global economy remains fragile. If you go back in history and look at all the major recessions, they were preceded by major policy mistakes. Either the Fed started raising rates too aggressively, or governments slashed spending too aggressively, or both.
The Cause of Depressions I am sick of Keynesian clowns who do not know the cart from the horse, who think debt is a free lunch, who think spending and debt are the ways to get out of debt problems and most of all never say how this debt is going to get paid back. What causes depressions is an unsustainable runup in credit and debt that precedes it, NOT a failure to go deeper in debt. Anyone who understands 5th grade math should be able to figure that out. Unfortunately, Nobel prize winning economists can't. "I listen to nonsense from some commentators claiming that if the US is not careful, it will suffer the same fate of Greece. Total rubbish." says Kolivakis. Three Examples of Total Rubbish
  • People who think crack addicts can smoke crack to cure their addiction
  • Alcoholics who think they can drink their way out of alcoholism
  • Debt junkies (and Keynesian clowns) who think one can spend one's way out of a spending problem
In a sense all of the above ideas will "work". In the first two cases the result is physical death, nature's way of solving the problem. In the third case, a bond revolt and economic death solves the problem. Depression is Well Earned If a depression is coming, and I think we are in one already, then it was well earned. Thanks to Greenspan and Bernanke, we had the biggest debt party and housing boom the world had ever seen, and depression is the unavoidable payback. Yet parade after parade of Keynesian clowns suggest there should be no payback for that party, that life can go on, that all we have to do is keep spending money no one has, money that cannot possibly be paid back, and all will be fine. Excuse me for pointing out the obvious Greenspan's attempt to defeat the recession and deflation in 2001-2002 did nothing but .... 1. Put off addressing the problem 2. Made a far bigger problem attempting to do just that Thus, those same economic clowns will soon be saying "I told you so" when this recovery dies although the reality is there was never any recovery in the first place, only a mirage of unsustainable spending. Keynesian clowns want to keep spending until the bond market pukes. As I said in More Keynesian Clowns Come Out of Woodwork ... No policy ever performs badly enough to cause its disciples to abandon it. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com

Thanks Mish for the refutation, much appreciated. As for bloggers versus nobel laureates, I would side with the sane individual every day of the week and twice on Sunday, no matter how many awards, designations, degrees and acolades that my hang on their wall.

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

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Anonymous said...

Man, I sure missed you. Love your sarcastic wit! Let 'em have it.

Harleydog said...


thx for the note. I always get a kick out of those out there who love to criticize the football or basketball coach but for them it's seditious to question "those in charge" who actions and ideas created this mess of a lifetime we find ourselves in.