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Friday, September 7, 2012

Paul Krugman, "Cleaning Up the Economy": "Is the Mess Really Getting Cleaned Up?"


"Barack Obama is an amateur."
- Bill Clinton


"But is the mess really getting cleaned up?" asks Paul Krugman in his
latest New York Times op-ed entitled "Cleaning Up the Economy" (http://www.nytimes.com/2012/09/07/opinion/krugman-cleaning-up-the-economy.html). Krugman's answers his own question:

"The next four years are likely to be much better than the last four years — unless misguided policies create another mess."

Or stated otherwise, they will get better, unless they get worse, which will happen if you don't listen to everything I say.

Sweet!

Krugman begins his opinion piece by telling us that Bill Clinton’s speech at the Democratic convention "was a remarkable combination of pretty serious wonkishness — has there ever been a convention speech with that much policy detail?" Observe that Krugman doesn't claim that Obama, who is still president, provided such detail in his own speech. Krugman also doesn't mention that Clinton's "policy detail" was demolished by Glenn Kessler's Washington Post "Fact Checker" column (http://www.washingtonpost.com/blogs/fact-checker/post/fact-checking-bill-clintons-speech-and-other-democrats-at-the-convention-in-charlotte/2012/09/06/55b9df68-f7e1-11e1-8b93-c4f4ab1c8d13_blog.html), e.g., "The repeated claim that Obama’s budget reduces the deficit by $4 trillion is simply not accurate."

So, given that Obama is still president and could be reelected, what reason does Krugman give for believing that the US economy will improve over the next four years? Paul's answer:

"And here’s the good news: The forces that have been holding the economy back seem likely to fade away in the years ahead. Housing starts have been at extremely low levels for years, so the overhang of excess construction from the bubble years is long past — and it looks as if a housing recovery has already begun. Household debt is still high by historical standards, but the ratio of debt to G.D.P. is way down from its peak, setting the stage for stronger consumer demand looking forward."

Hmm, when Krugman speaks of "the ratio of debt to G.D.P.", he is obviously referring to "household debt" and not national debt. National debt today tops $16 trillion and exceeds 100% of America's Gross Domestic Product (see: http://jgcaesarea.blogspot.co.il/2012/09/gail-collins-bill-barack-and-us-how.html), but why should that stand in the way of a recovery?

And then, of course, there is Krugman's reference to Obama's auto bailout, which "made the slump a lot less awful than it might have been." Well, having succeeded in rescuing GM once, Obama, if reelected, should look forward to rescuing GM a second time, given the talk that GM is again headed for bankruptcy (see: http://www.forbes.com/sites/louiswoodhill/2012/08/15/general-motors-is-headed-for-bankruptcy-again/).

I would also mention in parting Krugman's acknowledgment of how dismal the US economy has been over the past three and a half years:

"Does this mean that U.S. economic policy has done a good job? Not at all."

Excuse me, Paul, but who is this Mr. or Ms. "U.S. economic policy" that has not done a good job? Does he have a name and a face, or are we simply to agree with your highness that had it not been for Obama, the current economic malaise would have been much worse?

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