25 Responses to “Krugman on the US housing bubble”

1. 
   sandrofrei1 on August 20, 2010 @ 9:53 am

   @DeRocco21 The irony is that it’s the Austrian/Chicago school that’s given us these overwhelming national debts. It’s really them who throw money out. The real Keynsians don’t go into deficit spending to stimulate the economy rather the theory says take money out of circulation in good times and put it into a slush fund (as would also be done for natural disasters) and then spend it into circulation through infrastructure development when times are tough.
2. 
   DetectiveRonak on August 20, 2010 @ 10:07 am

   wtf. dont call this country thr strongest in the world. fucking recession and stress everywhere
3. 
   whoisleipo on August 20, 2010 @ 10:19 am

   Krugman was advocating a housing bubble back in 2002:

   “To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
4. 
   gunsandbullhorns on August 20, 2010 @ 11:07 am

   continued…

   If you disagree, then by all means, PROVE ME WRONG by citing an example.
5. 
   gunsandbullhorns on August 20, 2010 @ 11:21 am

   @Itsrothytime
   1) Well, if you don’t want to debate whether or not an after-the-fact ad hoc explanation is post hoc, then I’ll let that one go.
   2) I only talk down to people who don’t read my words carefully enough. For example, I drew a distinction between Economic Prediction and Economic Forecasting. Economic Theory is useful for making qualitative predictions. Economic Forecasting (which deals with cardinal units) is an ART — not a science…
6. 
   alex30085 on August 20, 2010 @ 12:14 pm

   it is amazing that nobody saw lehman brothers coming, the effects of deregulation..
7. 
   Itsrothytime on August 20, 2010 @ 12:30 pm

   @gunsandbullhorns we can quibble over semantics (btw, the no true scotsman fallacy is defined as an ad hoc attempt to retain an unreasoned assertion). i’m quite familiar with the austrian school. that being said, to say that economic forecasting is not at all quantitative is to misunderstand the field. economics involves a vast amount of calculation. i’m kind of sick of reading your comments where you talk down to people when you’re simply a nobody who acts like a know it all
8. 
   gunsandbullhorns on August 20, 2010 @ 1:22 pm

   @Itsrothytime
   The word you’re looking for is “post hoc” — not “ad hoc”. Apparently, you’re not familiar with Austrian economic methodology. My point about quantitative vs qualitative predictions is important. EVERY school of economic thought worth mentioning pays lip-service to this key tenet of economic science. Some are more consistent than others.

   Economic Forecasting is an ART. There are no quantifiable constants in economics. Do you disagree?
9. 
   Itsrothytime on August 20, 2010 @ 2:07 pm

   @gunsandbullhorns continued… entirely different perspective from the austrian school. to praise the austrian school on the basis of prediction i think is being childish. we can debate all we want but the fact is that proselytizing an economic theory is like proselytizing a religion…it’s annoying and shows that you are one-sided in the way you look at things
10. 
    Itsrothytime on August 20, 2010 @ 2:39 pm

    @gunsandbullhorns i really respect that you have an open mind. it’s a fallacy to construe peter schiff’s faulty predictions (of which there are a few) as not being in the capacity of his austrian school thinking. that is known as making an ad hoc attempt to retain an unreasoned assertion or, in the layman’s terms, Antony Flew’s “No True Scotsman” fallacy. Dean Baker has written more than a few books and articles on the housing crisis and he predicted the bubble (as I mentioned earlier) from an..
11. 
    gunsandbullhorns on August 20, 2010 @ 2:43 pm

    @Itsrothytime
    Continued…

    4) I’m not talking about Dean Baker. I’m criticizing Paul Krugman, and Proselytizing for the Austrian Tradition, because they understand the science of booms, busts & depressions. If you wanna’ point me in the direction of some good Dean Baker works, then feel free to do so. From what little I’ve read about him, he seems to have a good head on his shoulders.
12. 
    gunsandbullhorns on August 20, 2010 @ 3:14 pm

    @Itsrothytime
    1) I’ll thank you to pay attention to the context in which I said that, before accusing me of “playing that game”.
    2) I’m talking about the Austrians. Peter Schiff doesn’t forecast the price of gold in his capacity as an Austrian. Austrian Theory doesn’t deal with quantitative predictions. Only qualitative predictions, predicated upon an “if”.
    3) To quasi-quote Paul Krugman, “Alan Greenspan created a housing bubble to replace the Nasdaq bubble”. Did you forget about that?
13. 
    Itsrothytime on August 20, 2010 @ 3:26 pm

    @gunsandbullhorns if you’re going to play that game, dean baker predicted the housing bubble before peter schiff. it’s really childish to play that game. peter schiff happened to be right this time but he’s been wrong time and time again about gold prices and he predicted a crisis that never came at the turn of the century
14. 
    mt6686 on August 20, 2010 @ 3:37 pm

    Krugman put a soda in the fridge and predicted it would get cold. He was promoting the housing bubble in the first place calling for lower interest rates to create demand.
15. 
    crambo0349 on August 20, 2010 @ 4:37 pm

    @gunsandbullhorns Apparently the video I was looking for was deleted. But here’s something:
    digg(dot)com/political_opinion/Far_Worse_than_the_Great_Depression_Peter_Schiff
16. 
    crambo0349 on August 20, 2010 @ 4:41 pm

    Well, I think his point was that there’s no way to sustain demand without a housing bubble, not that it’s necessarily good.

    Schiff said it on a video on YouTube. I don’t want to spend much time searching for it. There are so many Schiff videos on here.

    By “stagnation” I mean GDP and employment growth greater than zero, but not enough to sustain full-employment.
17. 
    gunsandbullhorns on August 20, 2010 @ 5:13 pm

    @crambo0349
    You’re right. I found a Krugman op-ed entitled ‘Running Out of Bubbles’ (May 27, 2005) in which he tacitly admits at least three times that there is a housing bubble.
    Have you read ‘Dubya’s Double Dip’ (August 2, 2002) in which Krugman suggests “To fight this recession… Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble”?

    I can’t find that Schiff quote. Do you remember where you heard/read it?

    What’s your definition of “stagnation”?
18. 
    crambo0349 on August 20, 2010 @ 5:21 pm

    @gunsandbullhorns Actually, Krugman predicted the housing bubble in 2005 (he wrote an Op-ed about it then) and Schiff in late 2006. Besides, Schiff always says there will be a recession, every year. And Schiff is on the record saying that this recession would be worse than the Great Depression. Well, no Great Depression II, though maybe a bit of stagnation (Krugman’s prediction).
19. 
    islandmuffin on August 20, 2010 @ 5:31 pm

    @lisabob22 Keynesian economics (AKA: Socialism on Demand) is a perpetual motion machine, where government spending is timed and turned on and off according to central planners. However, Keynesian spending eventually degrades into an unstable pyramid scheme that feeds stagflation
20. 
    gunsandbullhorns on August 20, 2010 @ 5:37 pm

    @madblueplanet
    Either debate me, or else shut-up. Alright?
21. 
    gunsandbullhorns on August 20, 2010 @ 5:58 pm

    @lisabob22
    I’m surprised you’re not familiar with the boiler-plate retorts to those accusations against the market. Let’s try and have a quick debate about the Great Depression, alright? HOW did the free market contribute to (or cause, or facilitate) the Great Depression? Which theory of the Business Cycle do you subscribe to? I believe the Austrian Theory of Mises & Hayek is the only correct one.

    Have you seen this yet? It’s fun.
    watch?v=d0nERTFo-Sk
22. 
    lisabob22 on August 20, 2010 @ 6:43 pm

    @gunsandbullhorns what do you say about the letting the free market rule when pretty much every economic crisis has been caused by letting the free marker do as they please? The Great Depression, The S&L Crisis, Black Monday, The “housing bubble” the Dot.com bubble, and the quadrillion $ in derivatives, not to mention the hundreds of workers killed in refineries and mines because these corporations were allowed to do as they please for the last 30 years
23. 
    madblueplanet on August 20, 2010 @ 7:33 pm

    See, it’s that kinda shit right there “I’m not impressed by it”, who the hell are you? Yeah you might read about the austrian school on wikipedia or w.e, but when push comes to shove Krugman vs. you, you lose. I’m not saying that there aren’t qualified people to defend the austrian school or criticize Krugman. I’m just saying they aren’t you…
24. 
    selfrealizedexile on August 20, 2010 @ 7:35 pm

    @madblueplanet

    F.A. Hayek won a nobel price on ABCT in ’74. Checkmate?
25. 
    selfrealizedexile on August 20, 2010 @ 7:37 pm

    Predicts it when even my parents were already seeing it a year before it happened? Wtf?