Krugman slowly going native (itulip) on us?

[Penguin]

http://economistsview.typepad.com/ec...ng-boring.html

Quotes:

Thomas Philippon and Ariell Reshef ... show that banking in America has gone through three eras over the past century. Before 1930, banking was an exciting industry featuring a number of larger-than-life figures, who built giant financial empires (some ... based on fraud). This highflying finance sector presided over a rapid increase in debt: Household debt as a percentage of G.D.P. almost doubled between World War I and 1929.

The banking industry that emerged from that collapse was tightly regulated, far less colorful than it had been before the Depression, and far less lucrative.... Banking became boring, partly because bankers were so conservative about lending: Household debt ... stayed far below pre-1930s levels.



Strange to say, this era of boring banking was also an era of spectacular economic progress for most Americans.

END QUOTE

Looks to me like Paul Krugman is putting piece after piece of the itulip world view onto the table. Starting to get the FIRE versus PC economy thing squared away.... he's not going to be very popular with the 'in' crowd if he keeps this up. :p

Will

[Slimprofits]

Re: Krugman slowly going native (itulip) on us?

This is a positive development. Krugman has a lot of sway with what I call, "regular" liberals. I.e. real Americans, not the political class, but that consider themselves liberals.

[SJ]

Re: Krugman slowly going native (itulip) on us?

If the Government apparatus was capable of operating with the same diligence and intelligence as a private business (it is not), I would go so far as to suggest that all financial institutions dealing with the broad public's monies (commercial banks, insurance companies and pension plans) should be operated as nationalized institutions. This would respect the principle that money is a means to an end (the production of goods and services which add real value to the human condition), and not an end in itself.

[rjwjr]

Re: Krugman slowly going native (itulip) on us?

I am a conservative that has read a couple of books by "liberal" economists in hopes of gaining a better understanding of that viewpoint. I could not relate to any of them (that's putting it mildly) except Krugman's "The Return of Depression Economics". Since, I keep abreast of his comments and take a listen when he has something to say. He may be a "liberal" in other areas, but I think he is quite level-headed and non-patisan when it comes to good economics. As such, I don't think it's a stretch to see Krugman in the iTulip camp.

[c1ue]

Re: Krugman slowly going native (itulip) on us?

I'm not so sure Krugman is headed iTulip's way.

iTulip/EJ has a proposal on how to grow out of the present predicament.

While there are actions which can encompass both fronts, I do not agree that Krugman is seeking to grow out of this situation. He's seeking to have government replace lost demand - quite a different proposition.

Krugman on the other hand wants REALLY gigantic stimulus packages. His primary complaints to date with Obama seem to be that the bank bailouts aren't working - banks should be nationalized, and that the stimulus packages are too small.

[nero3]

Re: Krugman slowly going native (itulip) on us?

I think Krugman is certainly having a different attitude towards bailouts and economic pain than itulip.

Krugman is pro spending. He is certainly a good guy, he knows low unemployment are more important than low inflation. Kind and very popular in Norway. I think a lot of what is preaching is similar to Steve Keen's site on debt deflation.

[FRED]

Re: Krugman slowly going native (itulip) on us?

I'm not so sure Krugman is headed iTulip's way.

iTulip/EJ has a proposal on how to grow out of the present predicament.

While there are actions which can encompass both fronts, I do not agree that Krugman is seeking to grow out of this situation. He's seeking to have government replace lost demand - quite a different proposition.

Krugman on the other hand wants REALLY gigantic stimulus packages. His primary complaints to date with Obama seem to be that the bank bailouts aren't working - banks should be nationalized, and that the stimulus packages are too small.

Official iTulip positions.

On bailouts of the banking system:

Create a Resolution Trust Corporation II, audit the banks and financial institutions, put the insolvent institutions into receivership, wipe out the shareholders, fire management, sell off the assets in an orderly way at market prices to prudent and well run institutions, and if the audits reveal evidence of criminal misconduct then charge and try the perpetrators.

On the fiscal stimulus:

A nation can no more borrow its way out of debt than can a business. USA, Inc. (see USA, Inc. Common Shares: Long or Short?) needs an complete institutional management reorganization and a debt restructuring, as do US households and businesses. As it will not get one, to avoid bankruptcy USA, Inc.will eventually inflate its way out of debt by allowing its trade partners to dilute its common shares, the US dollar, thus dividing the debt by the unit of currency (see Ka-Poom Theory circa 1999).

[bpr]

Re: Krugman slowly going native (itulip) on us?

Official iTulip positions.

On bailouts of the banking system:

Create a Resolution Trust Corporation II, audit the banks and financial institutions, put the insolvent institutions into receivership, wipe out the shareholders, fire management, sell off the assets in an orderly way at market prices to prudent and well run institutions, and if the audits reveal evidence of criminal misconduct then charge and try the perpetrators.

On the fiscal stimulus:

A nation can no more borrow its way out of debt than can a business. USA, Inc. (see USA, Inc. Common Shares: Long or Short?) needs an complete institutional management reorganization and a debt restructuring, as do US households and businesses. As it will not get one, to avoid bankruptcy USA, Inc.will eventually inflate its way out of debt by allowing its trade partners to dilute its common shares, the US dollar, thus dividing the debt by the unit of currency (see Ka-Poom Theory circa 1999).

Useful summary of the iTulip position. Thanks.

[LargoWinch]

Re: Krugman slowly going native (itulip) on us?

he knows low unemployment are more important than low inflation.

nero3, you are confusing the fact that unemployment and inflation are mutually exclusive.

[Penguin]

Re: Krugman slowly going native (itulip) on us?

Oh, he has quite a journey in front of him to be sure, hence the 'slowly' part. But you have to admit that he has broken with the FIRE interests in a couple of big ways recently.

First he has absolutely vilified the current bank bailout scheme for what it is: a transfer of bad assets from banks to taxpayers... who have to pay for the privilege of getting the short end of the stick. Second, he has recognized the need to implement regulations to put these banks on a short leash in the future. Thirdly, he has come to believe that the banks have become in many ways not enablers of capitalism but in many ways parasitic in its relationship to the underlying produce/consume economy.

He's getting there.

Will