An economic masochist

Paul Krugman endorses Ben Bernanke’s reappointment to a second term as Chairman of the Federal Reserve Board of Governors:

Ben S. Bernanke deserves another term as Federal Reserve Chairman based on his success in battling the financial crisis, said Princeton University Economist Paul Krugman, a winner of the Nobel Prize.

“He’s earned the right to a second term,” Krugman, 56, said yesterday in an interview in Kuala Lumpur. “He turned the Fed into the financial intermediary of last resort. When the banking system failed to deliver capital where it was needed, he put the Fed into the markets.”

Debate over the fate of Bernanke, 55, is intensifying as he nears the end of his four-year term as chairman on Jan. 31. While Krugman and economist Nouriel Roubini have voiced support for the former Princeton economist, others including Anna Schwartz have said a lack of transparency exacerbated the financial crisis.

“I think Bernanke has done a really good job,” Krugman said. “He failed to see this coming and he was behind the curve in early phases. But he’s been really very good in the sense that it’s really very hard to see how anyone could have done more to stem this crisis.”

Krugman’s logic is, as usual, hopelessly hapless. One suggests that it would have been fairly easy to do more to stem this crisis, beginning with seeing it coming and not getting behind the curve in the early phases. And, of course, that’s not even beginning to get into the insane attempt to prevent home loan defaults by giving billions to the holders of mortgage-backed securities. Or cutting interest rates when raising them was required. Or driving total credit market debt to nearly 4x GDP. Or refusing to turn over the hidden records of more than 12.8 trillion in grants and loans given out by the Fed and funded by the public. Undsoweiter….

And on a related note, read this and cringe in terror:

What most readers probably don’t know is the reason Krugman became an economist in the first place. “I went into economics,” he wrote in an e-mail message, “because I read Isaac Asimov’s Foundation novels, in which social scientists save galactic civilization, and that’s what I wanted to be.”

As an Austrian who has read Foundation several times and therefore fully grasps the implications of what drives Krugman’s emotional attachment to Keynesianism, one thought leaps immediately to mind: Sweet St. Darwin of the Galapagos, prega per noi condannati!

UPDATE- Some words were simply made for eating:

So it seems that we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.
– Paul Krugman, August 9, 2009

Krugman’s article is not only likely to blow up in his face over time, it’s simply wrong. “The point is that this time, unlike in the 1930s, the government didn’t take a hands-off attitude while much of the banking system collapsed.” This is hugely misleading. Bank failures as a percentage of total bank deposits in 2008 and 2009 are running at a rate double that of the bank failures of 1930 and 1931. In August, with at least three very large bank failures known to be in the works but not yet counted, it’s already 3.75% in 2008-09 vs 1.99% in 1930-31

Mailvox: the Fowl Atheist responds

In addition to yesterday’s post, I also sent the following email to PZ Myers:

My dear Dr. Myers, since you were previously afraid of a radio debate with me on the evidence for the existence of gods, perhaps you’ll be more willing to engage in a written debate on the scientific evidence for evolution. After all, if the issue is so comprehensively settled in evolution’s favor, it should be no trouble whatsoever to make your case to everyone’s satisfaction, however initially dubious they may have been. And since you have now asserted that there are no Worthy Opponents to be found on this issue, you no longer have any need to hide behind your stated belief in my supposed crackpottery to avoid debate.

If you don’t mind, I suggest that you may wish to explain to some of your more reading-challenged fans that the context in which you were posting about engaging Worthy and Non-worthy Opponents tends to preclude peer-reviewed publication in scientific journals. In any case, I look forward to hearing from you anon.

He responded via email, curt but civil. I did not obtain permission to post his missive, so to summarize, it simply stated that I am not a Worthy Opponent as he errantly believed I assume myself to be, and informed me that I am not merely a crackpot, but a superlative example of the species. I replied thusly:

Yes, I understood that is your contention. It was rather obvious, especially considering that you stated outright: “There is no one in the green box.” Unlike many of your readers, my reading comprehension is in good working order. Of course, the entire point of your post was that because there are no Worthy Opponents, it is therefore necessary to engage Unworthy Opponents lest you lose the public. Which is quite true, and is also why it makes sense for you to engage in debate with various Opponents you deem Unworthy, such as myself. Even so, there’s nothing preventing you from running away again… and that’s clearly what most of the readers at both Vox Popoli and Pharyngula expect. I must confess that my favorite of the various excuses your readers prepared for you was the one related to peer-reviewed science. Great stuff!

Last time, your excuse was the potentially hostile environment and fears of a Gish Gallop. I’m sure we’re all interested in knowing what it will be this time.

It’s too soon to say for certain, but I’m afraid it appears as if the intrepid cracker-killer is on the verge of once more beating a very brave retreat. But, let’s not forget that Myers has surprised us before. I, for one, never dreamed he’d have the steel to carry through with the threatened cracker-killing.

WND column

Obama and the ‘B’ Ark Economy

The remarkable thing about the “wildly popular” scheme to encourage American consumers to purchase more automobiles is not, as a few conservative commentators have wryly remarked, that the mainstream media finds it surprising that people enjoy federal largesse. It is, rather, that so many commentators have recognized that the program is merely designed to encourage tomorrow’s consumption today. This is remarkable because most of them had not hitherto been able to recognize a similar pattern that has been at work in the American economy since 1983.