June 2019

Sun Mon Tue Wed Thu Fri Sat
            1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30            

« Cartography | Main | Simpsoniana »

Jul 27, 2007

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Bubba

"What I guess I didn't realize was how deep the denial still runs."

Once again, proving why Krugman has no real understanding of the fact that politics has nothing to with real life economic situations.

Ed Cone

He's actually talking about economic predictions: "Each new peak in oil prices was met with declarations that it was all speculation — like the 2005 prediction by Steve Forbes that oil was in a 'huge bubble' and that its price would be down to $35 or $40 a barrel within a year. And on the other side, as recently as this January, National Review’s Buzzcharts column declared that we were having a 'pop-free' housing slowdown."

He could have included this gem from my old friend Neil.

Not sure what you mean that politics has nothing to do with real life economic situations. By one measure, the impact includes regulations, taxes, etc.

But Krugman has identified another kind of relationship: putting what one wants to see ahead of the actual numbers. It doesn't change the numbers, but people see such things attached to brands like the ones cited (including Forbes and the Wall St Journal) and think they were getting economic analysis, and may suffer real life economic consequences.

Bubba

"He's actually talking about economic predictions."

Only as a way to reinforce his political agenda.

He's the perfect example of what Milton Friedman had in mind when he said that "even some people with PHDs in economics have a hard time thinking like economists".

And Krugman does indeed fit the bill of what you ascribe to him, while fulfilling Friedman's statement:

"....putting what one wants to see ahead of the actual numbers. It doesn't change the numbers, but people see such things attached to brands like the ones cited (including Forbes and the Wall St Journal) and think they were getting economic analysis, and may suffer real life economic consequences."


We see that in his opening statement:


"The economic expansion that began in 2001 has yet to produce any significant gains for ordinary working Americans. And now it looks as if it never will."

Krugman is now just as much of a brand as those you mentioned.

The article is behind the Paywall, and I do not know the rest of his point.

However, based on what I DO know, I rather doubt he mentioned the correct words regarding is happening on the markets.

It's called "correction", not "bubble".

I wonder how many people are going to be smart enough to take advantage of the opportunity?

Ed Cone

I hate that paywall. Just FYI, the thing about shared benefits of the expansion is actually his kicker, not his lede.

But I'm not sure what you're saying here, beyond reiterating your distaste for Krugman. He's stated that some people seem surprised at the bad news on housing and oil, even though the data has seemed pretty clear, and he has provided examples of analysts who predicted the situation incorrectly as evidence that some people are indeed surprised. What is it in this analysis that you disagree with, other than the characterization of a 500-pt haircut for the Dow as a bubble popping rather than a correction?

Bubba

"He's stated that some people seem surprised at the bad news on housing and oil..."

Only those who haven't been paying attention.

Much has been said about these subjects in the last few years, some of it wheat, some of it chaff.

The correction was also anticipated by those who were/are paying attention.

Krugman has no credibility when criticizing "analysts who predicted the situation incorrectly", when it's apparent that he is consistently guilty of the same thing.

It's amazing how Krugman is always so sagacious after the point.

I've yet to see any worthwhile analysis from him that does anything other than advance his view of how it all should be, and point the finger after the fact.

As Thomas Brewton says,

"Paul Krugman is a controversial apologist for rather far-left-liberal political and economic views. He is by training and former profession an economist himself. Before joining the Times as a columnist, he was held in high regard among academic economists. Today he is seen more as a propagandist whose economic predictions, usually damning Republic(an) moves such as tax cuts, have often been notoriously wrong."

Daniel Okrent is quoted as saying

"Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults."

We have seen ample evidence of that through the years, including the information provided right here on this blog by Pat Michaels in his on point debunking of the subject matter of one of Krugman's typically poorly thought out hit pieces.

Ed Cone

Understood, even before your latest documentation: you are not a Krugman fan.

That does not change, or even challenge, the fact he presents and documents: that big-name media mislead many people about the economic realities of the day.

Bubba

"....that big-name media mislead many people about the economic realities of the day."

Please spare us the partisan and revisionist dogma.

That is unequivocally false.

The evidence of "big name media" who have constantly beat the drum about how bad the economy is in recent years (for partisan political purposes)is well established.

Here's just a small slice of the record.

A typical example:

"On October 8, after the 13th straight month of reported job gains, CBS anchor Dan Rather chose to link President Bush with the worst economic period in American history. Apparently assuming poor job growth over the next four months, Rather proclaimed, 'It’s the first net job loss on a President’s watch since Herbert Hoover during the Great Depression of the 1930s.'"

How many more examples do we need?

Krugman, and you, need to stop trying to have it both ways.

RB

""Each new peak in oil prices was met with declarations that it was all speculation ... "
Rhetorical Q's:

1.Who reading thinks oil is infinite ?
2. How influential is the usage of oil to life ?

Ultimately, it will be about geology. Denial is globally rampant and lifestyle threatening to most.

If you own a McMansion mortgage and drive a SUV or any type of gas guzzler (like my '95 S10) you will find energy costs and housing costs taking up more of your personal income pie. This is a trendline relationship in the 'up' direction only!

There are many vested interests that will obfuscate that fact for whatever agenda they have.

This sort of story will be said many more times, many more ways.

One set of choices is to adjust. Another set of choices is to continue as if nothing is different today compared to yesterday.

Ed Cone

Bubba, I'm not sure what point you are trying to make.

Krugman doesn't make any sort of blanket statement about media coverage of the economy. He (along with many others in the major media, of which he is a part) has been warning on housing for some time.

His column documents the irrefutable fact that some people in the major media were cheerleading instead of analyzing, and thus got some important things wrong. What is there to object to in that statement, other than it being said by a guy you dislike?

Bubba

"His column documents the irrefutable fact that some people in the major media were cheerleading instead of analyzing, and thus got some important things wrong."

The statement's demonstrably WRONG.

Any "cheerleading" constituted an infinitesimally small amount compared to the negativity about the economy that we've seen for 6 1/2 years.

Why is that so hard for you to acknowledge?

You and Krugman are simply trolling.

Ed Cone

Bubba, I honestly don't understand what you are saying in this thread, or why you see it as an occasion for vituperation.

It is not demonstrably wrong that some people were cheerleading in the face of the data, it is documented fact. That doesn't mean that everyone was cheerleading.

I'm also confused about your characterization of "negativity" on the economy. People who warned about the housing market and sustained high oil prices were correct. Investors who followed their advice would be better off than those who listened to the cited remarks by Forbes, WSJ, et al. Why is it bad to point that out?

Bubba

You understand perfectly.

Stop trolling.

Ed Cone

Actually, I don't. I'm trying to honor your comments by responding to them, and looking for common ground around factual statements.

If you feel Krugman is so compromised as to be unworthy of quoting, anytime or for any reason, fine. I disagree.

Newk

Actually, if you took Krugman's sky-is-falling forecast to heart (the one in August 2006) you presumably would have moved your money out of equities and missed out on a 15% bump in your portfolio, even after the recent downturn. Bonds and government notes only delivered half that rate of return. Of course, you could have invested in Fidelity's southeast asia fund and be up 45%, but I dont think Krugman was pushing that.

Ed Cone

Newk: What would a buy and hold based on the strategies promulgated by Forbes and Barsky have gotten you? How would that compare with cashing out and putting everything in t-bills last August when Krugman rang the bell?

Bubba

Let's look at some of Krugman's other prognostications:


-- "right now it looks as if the economy is stalling..."
(Sept. 20th, 2002)

-- "We have a sluggish economy, which is, for all practical purposes, in recession..."
(May 29th, 2003)

-- "An oil-driven recession does not look at all far-fetched."
(May 14th, 2004)

-- "a mild form of stagflation - rising inflation in an economy still well short of full employment - has already arrived." — (April 18th, 2005)

As one pundit quipped "Krugman has accurately predicted 11 of the last 6 recessions."

Ged

So what Bubba is trying to say is that Krugman is to the economy as William Kristol is to the Iraq war. I can live with that.

Ed Cone

The quip about predicting recessions may have been applied to Krugman, but it's an ancient (and excellent) line that is usually aimed at economists in general and is sometimes credited to Paul Samuelson re Wall St. indices.

Bubba

But is obviously most appropriate to Krugman.

In addition, Kristol has a LONG way to go before before he sinks to the level of incompetence and irrelevance that Krugman enjoys.

Ged

"In addition, Kristol has a LONG way to go before before he sinks to the level of incompetence and irrelevance that Krugman enjoys."

That has to be the single funniest thing I've ever read from you. Thanks for the laugh!

Newk

Ed: Treasuries have been paying between 4.5% and 4.75%. The S&P 500 is up 15% since Krugman's siren. I supposed a die-hard buy-and-hold guy could have put his money into Berkshire Hathaway, in which case you'd be up more than 20%, but at $91,300 a share, that would of ruled out a lot of pikers such as myself. Anyway, based on a $100,000 portfolio, you would have left $10,000 on the table had you moved it into government paper. Of course that's before fees, commissions and occasional runs to CVS for Tums.

Ed Cone

More reasonable comparison might be an investor shorts oil in 2005 when Steve Forbes says it's headed to $35 or $40 a barrel within a year, or ignores Krugman last summer after reading folks like Barsky or BuzzCharts and rides his investment in housing/loan sector stocks.

Newk

Not sure that’s a more reasonable comparison, Ed. Your average investor doesn’t sell stocks short or speculate on oil futures. Nor does he put the bulk of his portfolio into one sector. Do you? By last August, big homebuilders like Toll Brothers and Pulte had already gotten whacked, so Krugman did little by alerting us after the fact. And for those who loaded up on bottom feeders like Novastar, well, they got what they deserved.

Ed Cone

This might be just as relevant.

And of course, the original point about some people being misled by bad advice from big names remains intact.

Bubba

"And of course, the original point about some people being misled by bad advice from big names remains intact."

.....which is exactly why we're talking about Krugman.

The comments to this entry are closed.