(10AM EST – promoted by Nightprowlkitty)
In the latest dust-up for career fanboy of economics, one Paul Krugman, he got wrongly called out for advocating for a housing bubble in 2002:
Dubya’s Double Dip?
By PAUL KRUGMAN, The New York Times
Published: August 2, 2002
The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. 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.
Krugman is a stenographer of which way the wind is blowing, he does not make the wind blow.
He is analyst can’t think outside the box, because he doesn’t realize the system has a box, and that he is firmly in it, tucked into bed, with a cup of warm tea.
Though people are hammering this poor old fool for the paragraph above, I find this one much more interesting:
The screenplay for that kind of movie always ratchets up the tension. The besieged citadel fends off assault after assault, but again and again rescue is delayed. And so it has played out in practice. Consumers kept spending as the Internet bubble collapsed; they kept spending despite terrorist attacks. Taking advantage of low interest rates, they refinanced their houses and took the proceeds to the shopping malls.
So true, you have to give Krugman that. Equity was taken out of the citizen’s citadels and transfer into goods at the shopping mall.
This is all well and good, but the consumer doesn’t ever get their money’s worth because corporations invented planned obsolescence. These corporations, helmed by the captains of the plutonomy, broke all craftman tradition, where pride in workmanship made goods meant to last forever. Now goods have planned self destruct.
Besides being an incredible drag on the economy due to the needless replication of resources, planned obsolescence also creates more environmental waste, all driven by profits for mega corporations.
Then the plutonomy had a grand idea, what if they were able to loot the home equity of the republic? It was a crazy dream that needed crazy cheerleaders, and Krugman was one.
And people across the land did refinance their citadels, and they bought a lot of crap at shopping malls, from the very corporate elite who would soon turn them out of their homes, but not before all their crap broke.
If the powers that be were serious about economic recovery, they would regulate such things as planned obsolescene, so we quit wasting our resources on needless replication of goods that should last a citizen a lifetime.
Liberating the citizens of this republic from the company store of the plutonomy.
That would be real change.