Jon Taplin writing in Talkingpointsmemo: 'Paul Krugman in Despair'

[flpoljunkie]

Interesting take.

Paul Krugman in Despair

By Jon Taplin - March 24, 2009, 12:13PM

Paul Krugman is in despair. Why should I care? When some of us were writing about the coming recession 14 months ago, Krugman was oblivious, saying "it's unlikely that America will experience a recession as severe as that in, say, Argentina."As Barack Obama's campaign gained strength a year ago, Krugman insisted that it was pipe dream and that Hillary Clinton was the only candidate that could beat the Republicans.

Now Krugman insists the only route for the Obama administration is to nationalize the banks. Krugman insists the public/private partnership announced yesterday by Tim Geithner is fatally flawed.

But the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt.

So maybe he should explain why Larry Fink of Blackrock and Bill Gross of PIMCO both are willing to put hundreds of millions of their own dollars at risk alongside the government to buy these assets? As Gross explained it, he puts up $50 Million, the Treasury puts up $50 Million and the Fed loans the partnership $300 Million. Krugman assumes Gross is going to put $50 million at risk just because the $300 million is non-recourse debt?

The problem with Krugman's whole nationalization scheme is that it creates a self-fulfilling prophecy for the Bear Raiders who have been shorting bank stocks. Assume we nationalize Citibank. The bears turn to another prey, Bank Of America. If they drive it's stock low enough, it too will get nationalized. The big question will always be "who's next?" The non-nationalized banks will be like wounded antelopes confronting a pack of wolves. Where will it end?

The whole Washington/New York axis of Cassandras might want to reconsider their "end of the world" rhetoric. I'd hate for Paul Krugman to look foolish three times in 12 months.

http://tpmcafe.talkingpointsmemo.com/2009/03/24/paul_krugman_in_despair/

[dionysus]

1. uh oh...

:popcorn:

[lamp_shade]

4. Scootch over a little.

:popcorn:

[Clio the Leo]

5. lol, dont hog it all! NT

[SunsetDreams]

18. got any left?

[lamp_shade]

19. Yea... nearly a whole bucket. I hate it when what appears to be a good flaming thread fizzles.

[Cha]

25. hmmmm..

:popcorn:

[lamp_shade]

2. Yes... interesting. Kick and rec.

[tridim]

3. Ouch!

:popcorn:

[watrwefitinfor]

6. Excellent. Thank you.

Makes you wonder some more, what the hell is Krugman's agenda.

Wat

[high density]

7. But he won the Nobel Prize!!

[Barack_America]

8. Also, a lot of the crap assets are owned by non-banking institutions...

That the federal government currently cannot nationalize (hence Treasury asking for increased powers to do just that).

Once again Krugman seems to be clueless as to how politics limits economic policy.

[vaberella]

17. Yeah, President O talked about that last night at the conference.

People keep focusing on the Banks, who are giving us problem. But the real issue is these massive insurance companies that have so many assets protected on their accounts that could collapse the economic market. AIG is not a bank to nationalize.

[KittyWampus]

38. It has, however a division that trades in FINANCAL PRODUCTS. And it's overseen by a federal agency

the Office of Thrift Supervision

[formercia]

9. Didn't you know?

Naked short selling is not a problem. Stocks going to penny value is just the market finding its own level. Like the tides, when someone pisses in the ocean in NY, nobody notices the rise in Boston, unless you look real close.
At that point, the black cat walks by twice.

:sarcasm:

[chill_wind]

10. A former Investment Banker for Merrill Lynch doesn't like Krugman.

Shocking.

[vaberella]

16. How is what Mr. Taplin saying in some way not liking Krugman?

He disagrees with Krugman and mentions points where Krugman has been wrong in the past. Krugman doesn't have a monopoly on being right and if what he says is true, Krugman wasn't the one screaming a future fall out as much as people like to credit him with.

[glitch]

11. Excellent comments to that post on TPM site, thanks for posting. nt

[ArchieStone1]

12. Next Taplin story: "Stiglitz in despair"

By the way. Taplin lies when he says Krugman said only Hillary could win the elections.

[Captain Hilts]

23. Krugman is a policy guy, not a personality guy. nt

[Marie26]

13. Gosh,

a Merril Lynch VP disagrees w/a Nobel Prize-winning liberal economist. Because Krugman wants to nationalize the banks. Who to trust? I just don't know. :sarcasm:

[Phx_Dem]

14. This can't be right. I thought Krugman was never wrong!!

[ArchieStone1]

21. Did you fact-check the claims accusing Krugman of being wrong?

Did Krugman say what Taplin claims he said? Did Taplin misrepresent what Krugman said?

Did Krugman really say Hillary and only Hillary could beat the Republicans?

A few links would put this matter to rest. Or does that fact that Taplin said it suffice?

[Political Tiger]

26. Krugman made it clear who he supported

He relentlessly and constantly attacked Obama (and his supporters) while having nothing but kind words for Mrs Clinton. That's fine and dandy, but since he decided to become a one-sided political partisan, it's hard to take his continuing attacks on President Obama and his policies seriously since he made it clear long ago that in his biased eyes, Obama can do no right:

http://www.nytimes.com/2008/02/11/opinion/11krugman.html?_r=1&hp

http://krugman.blogs.nytimes.com/2008/02/01/obama-does-harry-and-louise-again/

http://www.nytimes.com/2008/02/04/opinion/04krugman.html?hp

http://www.nytimes.com/2008/05/26/opinion/26krugman.html?ref=opinion

http://www.nytimes.com/2008/04/25/opinion/25krugman.html

http://www.nytimes.com/2008/04/04/opinion/04krugman.html

http://tpmcafe.talkingpointsmemo.com/2008/02/11/paul_krugmans_cheap_shot/

http://tpmcafe.talkingpointsmemo.com/2008/04/04/losing_paul_krugman/

http://andrewsullivan.theatlantic.com/the_daily_dish/2008/05/why-krugman-is.html

http://blogs.tnr.com/tnr/blogs/the_plank/archive/2008/02/11/what-is-wrong-with-paul-krugman.aspx

http://www.huffingtonpost.com/2008/02/12/hillary-ad-cites-paul-kru_n_86235.html

[lamp_shade]

27. Good response, Tiger.

[ArchieStone1]

28. that was not the question

The question was whether it was true that Krugman said Hillary was the only one that could beat the Republicans.

We know he supported Hillary. That's not being disputed.

[Political Tiger]

31. Do you think

he would put himself in the middle of the primary fight between Obama and Hillary, taking Hillary's side on everything, he he didn't think Hillary could beat the Republicans? Now, I don't know if he used the exact words that only Hillary could be the Republicans, but after he changed himself from an economist to a political pundit, he certainly did suggest it.

http://www.huffingtonpost.com/2008/03/03/paul-krugman-attacks-obam_n_89529.html?page=2

http://krugman.blogs.nytimes.com/2008/03/05/electability-again/

http://www.nytimes.com/2008/03/03/opinion/03krugman.html

http://www.nytimes.com/2008/06/30/opinion/30krugman.html?_r=1&hp&oref=slogin

[ArchieStone1]

32. wait...so Taplim simply "thinks" that Krugman thought Hillary was more electable

Supporting someone does not necessarily mean that we think our favorite candidate is the only one who could beat the opponent.

I was with Kucinich, then Edwards, then Obama. Go figure.

[Political Tiger]

33. That's not what I said

I have no idea what Taplim thinks, I can't read his mind. Maybe you should write him and ask HIM to clarify his statement. I don't know the man so I can't speak for him.

In my view, it doesn't really matter if Krugman flatly said only Hillary could beat McCain and/or the Republicans. What matters is that Krugman has been hostile towards Obama from the beginning and continue to be so. He is biased. He clearly didn't like Obama the candidate and he clearly does not like Obama the president. Has ever said anything positive about Obama? Surely Obama can't be wrong on everything, but if you listen to Krugman one gets the impression that Obama is wrong on everything.

Krugman has gone from criticizing Obama to just bitching about Obama, and that's why in my opinion he has lost all credibility. When all someone does is bitch, whine and complain, I tend to tune them out.

[vaberella]

15. But...but...but...Krugman turns blood into wine. n/t

[BeyondGeography]

20. Mandates! Across-the-Board Mandates!

Krugman has always hated that Obama won't drink from his political poison dispenser.

[lamp_shade]

22. True. His nose keeps getting more and more out of joint as the weeks go by.

[depakid]

30. Bad policy is bad policy

Get a clue.

[BeyondGeography]

34. Obama figured out how to be elected President, get high approval ratings and still be a progressive

I think it's time for others to get a clue.

[depakid]

35. There are a whole lot of eminent economists who find this to be bad policy

and look at other policies and appointments as center right (i.e. Clintonesque- or Rockefeller Republican) rather than progressive.

[Jennicut]

24. Oh boy. Here come the Krugman worshipers

Or maybe not.
Either way its interesting.

Also, worshiping anyone is kind of crazy. We all make mistakes and are human. Even Jesus was not perfect.

[nichomachus]

37. Followed by the Obama worshippers -- it's all very biblical

Basically, it's come down to a theological battle.

The Obama worshippers -- let's call them the creationists

The Krugman worshippers -- let's call them the scientists.

Quite a battle.

[depakid]

29. Deal responsibly with short selling (and short sellers) - problem solved

Not that this administration seems (as yet) interested in holding these folks (or many other Wall Street criminals and fraudster) accountable.

[inna]

36. weak. nt

[paulk]

39. well, when our inflation rate hits 5,000%, like Argentina's did

then Mr. Taplin can make the claim that Krugman was wrong.

Also, Krugman never said that only HRC could win.

So, Mr. Taplin starts off his article with two untruths - and the reader is supposed to assign him any credibility for the rest?

[chill_wind]

40. They line up wide-eyed for the comments of an obscure ex-investment-banker blogger

and they absolutely won't give a half a dozen other leading liberal economists of our own (NOT just Krugman) the time of day. It doesn't conveniently fit in with the theology.



A Bank Bailout That Works

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=114&topic_id=61569&mesg_id=61569

[paulk]

42. it really sucks, IMO

that the tactic used over and over by the faithful

to beat down the heretic

is character assassination

These issues need to be discussed, and such tactics really don't do much in that direction...

[amandabeech]

41. Presently, the FDIC takes banks into receivership (nationalization) because of insolvency.

Insolvency doesn't have anything to do with stock prices, but only the value of the bank's assets versus its liabilities.

Low stock prices may mean eventually delisting from the NYSE, unless the price can be fixed by a reverse stock split or a return to profitability.

I would sure like to see this guy back up his assertion.