Morning Rant and a bit of today's Krugman in NYT

[livvy]

Late summer 2002, Paul Krugman wrote an article about the state of our economy, and it included his concern about the possibility of a real estate bubble. It is one of the articles included in his book The Great Unraveling, published in 2003.

"Back when I first got professionally obsessed with Japan’s problems, around four years ago, I made myself a mental checklist of reasons that Japan’s decade of stagnation could not happen to the United States. It went like this:
1. The Fed has plenty of room to cut interest rates, which should be enough to deal with any eventuality.
2. The U.S. long-term budget position is very strong, so there’s plenty of room for fiscal stimulus in the unlikely event interest rate cuts aren’t enough.
3. We don’t have to worry about an Asian-style loss of confidence in our business sector, because we have excellent corporate governance.
4. We may have a stock bubble, but we don’t have a real estate bubble.

I’ve now had to strike the first three items off my list, and I’m getting worried about the fourth.
More and more people are using the B-word about the housing market. A recent analysis by Dean Baker, of the Center for Economic Policy Research, makes a particularly compelling case for a housing bubble. House prices have run well ahead of rents, suggesting that people are now buying houses for speculation rather than merely for shelter. And the explanations one hears for those high prices sound more and more like the rationalizations one heard for Nasdaq 5,000.

If we do have a housing bubble, and it bursts, we’ll be looking a lot too Japanese for comfort.
A recent Federal Reserve analysis of Japan’s experience declares that the key mistake Japan made in the early 1990’ was ‘not that policy makers did not predict the oncoming deflationary slump-after all, neither did most forecasters-but that they did not take out sufficient insurance against downside risks through a precautionary further loosening of monetary policy.’ That’s Fedspeak for ‘if you think deflation is even a possibility, throw money at the economy now and don’t worry about overdoing it.’” pgs. 83-84

Now, keep in mind: who was in charge when he first made his list? Yes, that’s right, Clinton’s Administration. By 2002, he had to cross out the first three, a mere two years into the lying weasel administration, where the right-wing and the centrists had had time to work their economic magic of trickle-down theories of tax cuts, (now) professed ignorance of corporate greed and seriously mismanaged financial institutions, and a wild child Wall Street.

And from 2002 on, Krugman was howling about the looming housing crisis, and the economic problems that were poised to become everyday words in our country. And he was written off as an alarmist and left-wing loony. He was right, and look where we’re at now.

So when Nobel prize-winner Krugman speaks, I’d say more people ought to take notice and listen. He is and has been howling about the stimulus plan for quite some time. Imagine how frustrating it must be to see the writing on the wall, and nobody else reading it.

Call your Congress Critters. Ask them to undo what the Centrists have done, and put back the stimulus in the stimulus plan. They have stirred up their minority base, and gotten them to call, and this is part of what is making some Dems so damn “flexible”. They are hearing from the minority who have become the majority of their messages. I’ve heard it’s about 100-1. That’s not a real representation of the voice of the people. That’s the Obama base sitting back thinking, “Now that the adults are in charge, I can relax.” No.We.Can’t. This is not a time to play nice with the minority. We can do that another time, when our country is on sounder footing, (although why we’d want to even then, I have no idea, because they never play nice, even when they own all the marbles).

Call 202-224-3121 (or use the toll-free service at 866-544-7573). Ask the Capitol operator to transfer you to one of your state’s U.S. senators. When you’re connected, say you’re calling to urge your senator to “support the Obama economic recovery plan and oppose all conservative amendments.” Call back and repeat for your other senator. Then contact everyone you know and urge them to do the same. Short, sweet, and simple.

You fought well disseminating the information of the abuses of the lying weasel administration. You supported Obama in the campaign. Apparently, the “war” is not over. We still have a few battles to fight before we get our country back. We the People can do it, and at least we have a rational and sane general at the helm. He cannot do it alone. He needs us to succeed.

Also, here is today’s NYT Krugman column. You can blame him for this morning’s rant. He inspired me and coffee did the rest.

February 9, 2009
OP-ED COLUMNIST
The Destructive Center
By PAUL KRUGMAN

What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses?

A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished.

Even if the original Obama plan — around $800 billion in stimulus, with a substantial fraction of that total given over to ineffective tax cuts — had been enacted, it wouldn’t have been enough to fill the looming hole in the U.S. economy, which the Congressional Budget Office estimates will amount to $2.9 trillion over the next three years.

Yet the centrists did their best to make the plan weaker and worse.

One of the best features of the original plan was aid to cash-strapped state governments, which would have provided a quick boost to the economy while preserving essential services. But the centrists insisted on a $40 billion cut in that spending.


more at the link...

http://www.nytimes.com/2009/02/09/opinion/09krugman.html?_r=1&th&emc=th

on edit: added page numbers from text and deleted a note that was intended for my email news crew.

[democracy1st]

1. I've really enjoyed seeing Mr. Krugman smash rightwing talking points

thanks for your post

[livvy]

2. He has helped me understand much about economics.

It's never been my forte. His plain-speak gets through to me, and he has been right on the money with his predictions and warnings for years.