Krugman v. Schwartz and Sanchez de la Cruz

by Eric T. Phillips

This video has been making the rounds; I’m re-posting it because it perfectly illustrates what I was talking about in my last post. On the one side you have Pedro Schwartz, a man who stands up and gives a passionate speech about economic topics in a language that is not his native one. And on the other hand, you have a defensive, mumbling, and condescending Krugman slouched back in his chair.

(Hat tip Manifest Liberty)

Also, see Krugman’s ridiculous response to Diego S├ínchez de la Cruz’s question about his repeated calls for the Fed to create a housing bubble in the early 2000’s:

(Hat tip EPJ)

He was joking, of course! Everyone read Krugman’s funny joke:

A few months ago the vast majority of business economists mocked concerns about a ”double dip,” a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I’ve repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.

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.

Hilarious. We have a modern-day Jonathan Swift on our hands.

And just in case you think I’m leaving out the punch line, here’s the next paragraph:

Judging by Mr. Greenspan’s remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman’s crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

So unfortunately, 2002 Krugman argues, it looks like Greenspan won’t be able to inflate the housing bubble to save the economy.

No wonder he hates public debates.

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