Do you feel depressed?

If you do, it's not you…

A worried Paul Krugman issues a warning to his readers and the public at large:

We are now, I fear, in the early stages of a third depression [the two past depressions were the "Great Depression" of the 1930s and the "Long Depression" of the late 1800s]. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend's deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

Krugman thus believes the actual cause of this potential depression is the political supremacy of fiscal conservative dogma over all efforts to support demand during a time of massive and unemployment, unemployment that may be chronic. In other words, Krugman believes the deficit hawks have defeated the proponents of stimuli in their political battle over economic policy. This, he believes, is a disaster that stands as a precondition for the next global depression.

Update

Chris Hayes and Dean Baker discuss Krugman's take on the current situation:

Last updated on June 29, 2010 at 12:02 pm

Paul Krugman calls out the GOP obstructionists

Their shameless gloating over the Chicago Olympic bid decision aroused Krugman's ire. Krugman concludes that:

…at this point, the guiding principle of one of our nation's two great political parties is spite pure and simple. If Republicans think something might be good for the president, they're against it — whether or not it's good for America.

Spite and obstructionism comes naturally to the Reaganite GOP:

Anyone surprised by the venomous, over-the-top opposition to Mr. Obama must have forgotten the Clinton years. Remember when Rush Limbaugh suggested that Hillary Clinton was a party to murder? When Newt Gingrich shut down the federal government in an attempt to bully Bill Clinton into accepting those Medicare cuts? And let's not even talk about the impeachment saga.

The only difference now is that the G.O.P. is in a weaker position, having lost control not just of Congress but, to a large extent, of the terms of debate. The public no longer buys conservative ideology the way it used to; the old attacks on Big Government and paeans to the magic of the marketplace have lost their resonance. Yet conservatives retain their belief that they, and only they, should govern.

The result has been a cynical, ends-justify-the-means approach. Hastening the day when the rightful governing party returns to power is all that matters, so the G.O.P. will seize any club at hand with which to beat the current administration.

It's an ugly picture. But it's the truth. And it's a truth anyone trying to find solutions to America's real problems has to understand.

The effective goal of the Republican Party: To exterminate the Democratic Party. That way doth dictatorship lie….

Learning by doing….

Economists struggling with their anomalies

Paul Krugman recently wrote a Bildungsroman about the economics profession for the New York Times Magazine.

Knee-jerk neo-liberalism

Ronald Reagan refuses to die

Paul Krugman's latest deliberates on the remarkable irrationality to be found in the healthcare debate:

The debate over the "public option" in health care has been dismaying in many ways. Perhaps the most depressing aspect for progressives, however, has been the extent to which opponents of greater choice in health care have gained traction — in Congress, if not with the broader public — simply by repeating, over and over again, that the public option would be, horrors, a government program.

And, Barack Obama = Hitler…

Krugman offers this explanation:

Washington, it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.

Call me naïve, but I actually hoped that the failure of Reaganism in practice would kill it. It turns out, however, to be a zombie doctrine: even though it should be dead, it keeps on coming.

But the fiend lives still. "So why won't these zombie ideas die?", Krugman asks.

Part of the answer is that there's a lot of money behind them. "It is difficult to get a man to understand something," said Upton Sinclair, "when his salary" — or, I would add, his campaign contributions — "depend upon his not understanding it." In particular, vast amounts of insurance industry money have been flowing to obstructionist Democrats like Mr. Nelson and Senator Max Baucus, whose Gang of Six negotiations have been a crucial roadblock to legislation.

But some of the blame also must rest with President Obama, who famously praised Reagan during the Democratic primary, and hasn't used the bully pulpit to confront government-is-bad fundamentalism. That's ironic, in a way, since a large part of what made Reagan so effective, for better or for worse, was the fact that he sought to change America's thinking as well as its tax code.

How will this all work out? I don't know. But it's hard to avoid the sense that a crucial opportunity is being missed, that we're at what should be a turning point but are failing to make the turn.

Krugman calls out America’s ‘democratic centralists’

The primary issue is health care and the secondary issue is the politicking which surrounds health care reform. Krugman asserts that:

…the fundamental fact is that we can afford universal health insurance — even those high estimates were less than the $1.8 trillion cost of the Bush tax cuts. Furthermore, Democratic leaders know that they have to pass a health care bill for the sake of their own survival. One way or another, the numbers will be brought in line.

The real risk is that health care reform will be undermined by "centrist" Democratic senators who either prevent the passage of a bill or insist on watering down key elements of reform. I use scare quotes around "centrist," by the way, because if the center means the position held by most Americans, the self-proclaimed centrists are in fact way out in right field.

We are fortunate that America has a representative democratic system and that those individuals and parties representing America's citizens can be held accountable for their actions — they can, in principle, be held accountable. As a matter of fact, the American system takes great care to safeguard the political autonomy of those individuals and parties that represent its citizens. And it is thanks to this protection that we can read sensible assessments such as this one from Krugman: "What the balking Democrats seem most determined to do is to kill the public option, either by eliminating it or by carrying out a bait-and-switch, replacing a true public option with something meaningless."

Why would America's "bought and paid for" Democrats represent the views and interests of most Americans when they really do not have to provide this service? They will not if they are rational. They will represent instead the groups that bought their care and concern.

Politics as usual…

Paul Krugman's latest article would rebuke those economists and pundits who believe the United States will soon or eventually suffer through a dangerous bout of inflation, with the coming price instability caused by the Obama recovery-stimulus program. Yet "Deflation," Krugman claims, "not inflation, is the clear and present danger." Why, then, would the fear-mongers miss this point, assuming Krugman rightly claims that deflation is the real threat? Krugman believes they have an axe to grind and are thus politicking the issue:

…it's hard to escape the sense that the current inflation fear-mongering is partly political, coming largely from economists who had no problem with deficits caused by tax cuts but suddenly became fiscal scolds when the government started spending money to rescue the economy. And their goal seems to be to bully the Obama administration into abandoning those rescue efforts.

Needless to say, the president should not let himself be bullied. The economy is still in deep trouble and needs continuing help.

The market fundamentalists, it seems, would rather watch the economy collapse than to see the federal government implement the kind and number of reforms needed to effective manage the crisis.

California here we come….

Krugman opines:

…the California [fiscal and political crisis] still has me rattled. Who would have thought that America's largest state, a state whose economy is larger than that of all but a few nations, could so easily become a banana republic?

Krugman — rightly — blames the infamous Proposition 13 and, transitively, every bit of the Reaganite foolishness that followed. The greater danger the California crisis prefigures, a danger applicable to the country as a whole, could be more easily managed at the federal level but for the rightwing economic thinking that still pervades the land. The key battle remains political in character.

Paul Krugman takes Senate obstructionists and the President to task

Krugman's critique focuses on the miserable fate of the Obama stimulus and those responsible for this possibility. A few highlights:

What do you call someone who eliminates hundreds of thousands of American jobs, deprives millions of adequate health care and nutrition, undermines schools, but offers a $15,000 bonus to affluent people who flip their houses?

A proud centrist. For that is what the senators who ended up calling the tune on the stimulus bill just accomplished.

And:

All in all, the centrists' insistence on comforting the comfortable while afflicting the afflicted will, if reflected in the final bill, lead to substantially lower employment and substantially more suffering.

But how did this happen? I blame President Obama's belief that he can transcend the partisan divide — a belief that warped his economic strategy.

After all, many people expected Mr. Obama to come out with a really strong stimulus plan, reflecting both the economy's dire straits and his own electoral mandate.

Instead, however, he offered a plan that was clearly both too small and too heavily reliant on tax cuts. Why? Because he wanted the plan to have broad bipartisan support, and believed that it would. Not long ago administration strategists were talking about getting 80 or more votes in the Senate.

George Bush blundered, in part, because his administration was made up of fools who ruthlessly pursued their 'golden' policies and refused to heed wise counsel. Obama now blunders because he wishes the fools remaining in power would bring their kind of foolishness to his consensus! Who, I must ask, is more foolish: Obama and his people or the GOP dead-enders? I would say the greater fool is he who makes common cause with his enemies….

Krugman’s nightmare

Paul Krugman's latest piece warns his readers that politically mucking around with stimulus legislation is dangerous. He concludes with:

It takes Congress months to pass a stimulus plan, and the legislation that actually emerges is too cautious. As a result, the economy plunges for most of 2009, and when the plan finally starts to kick in, it's only enough to slow the descent, not stop it. Meanwhile, deflation is setting in, while businesses and consumers start to base their spending plans on the expectation of a permanently depressed economy — well, you can see where this is going.

Paul Krugman has written the latest GOP obituary

To be sure, Krugman considers the role played by the Bush administration in his critique. But he also paints in broad strokes: "That's why the soon-to-be-gone administration's failure is bigger than Mr. Bush himself: it represents the end of the line for a political strategy that dominated the scene for more than a generation."

The strategy in question:

Forty years ago the G.O.P. decided, in effect, to make itself the party of racial backlash. And everything that has happened in recent years, from the choice of Mr. Bush as the party's champion, to the Bush administration's pervasive incompetence, to the party's shrinking base, is a consequence of that decision.

It is certainly possible the Republican Party will learn from Sarah Palin's crash and burn during the last Presidential campaign. But, speaking for myself, I hope they prove to be as dull as they seem to be!

Crumbs for the center-left

Let us see if Obama has the guts of a cat burglar…

We will know if Obama has what it takes, Paul Krugman and Greg Sargent suggest, if the President-elect appoints progressive economists and labor representatives to advisory board positions of no great influence!

I recall hearing something about the uselessness of putting lipstick on a pig….

Paul Krugman judges the plan

"No deal," Krugman avers. Why? Because

• the plan might work, but only if the Treasury Department pays above-market prices to collect Wall Street's garbage and, more importantly, God smiles on the wicked;
  
• the plan fails to identify and express the reasons that it will work;
  
• and the plan refuses to impose a quid pro quo on the miscreants.
  

In other words, the plan is morally bankrupt and irrational, although Krugman is much too polite to say this. He is also too polite to point out that the plan in effect transforms the federal government into Wall Street's bagman.