Economic Blues

Tuesday, May 05, 2009

Paul Krugman, Nobel Prize-winning economist, New York Times op-ed columnist, blogger, and the author of The Return of Depression Economics and the Crisis of 2008, discusses the state of the economy.


Paul Krugman

Comments [32]


Pay cuts or layoffs--both reduce total income, it's just that one leaves people unemployed while the other doesn't.

Krugman is wrong that one is better than the other, if that's what he's claiming.

May. 05 2009 04:49 PM
Yoichi Hariguchi from Sunnyvale, CA

Nationalization Scenario.

While I was listening the show, I started thinking Obama admin. is considering bank nationalization. This is how it goes:

1. 10 banks need more capital (according to the leak).
2. Fed will set a deadline to raise capital.
3. If some banks fail (and they will, I think), they need the capital from somewhere.
4. From where? Of course from the government.
5. But the congress will not allow it because of the TARP experience.
6. Now Obama admin. can say "Congress did not cooperate. We have only choice."

What do you think?

May. 05 2009 01:34 PM
Yoichi Hariguchi from Sunnyvale, CA


Brian, I love your show, but please correct the factual errors on air!

George Will probably remembered that Prius did lose money before 2001 because the sales volume was low. But as the above article points out, it became profitable after the sales volume picked up. It is quite common that those hacks use old obsolete data to justify their opinions.


May. 05 2009 01:23 PM
jgarbuz from Queens

To Hjs and Karen

I lived on kibbutz in Israel for a year back in the 1970s. I also lived outside in Israel for nearly 10 in addition. Trust me when I tell you, you don't want socialism UP CLOSE. It's much nicer at a distance, like grass looking greener on the other side of the hill.

May. 05 2009 10:53 AM
hjs from 11211

maybe they should start by ending gas/oil subsidies and make amerikans pay the real price for their greedy lifestyles

May. 05 2009 10:51 AM
jgarbuz from Queens

Regarding the automobile industry, the American industry "brand" was founded on cheap petroleum and the production of large, luxurious, but not particularly reliable vehicles. The German "brand" is based on "superior engineering" and very deep glossy paint jobs. The Swedish Volvo was branded on "safety first" and "ergonomics." The British on snob appeal. The Italian on race cars. The Japanese on "getting the most for your money." For the US auto industry to re-brand itself as maker of reliable, energy efficient vehicles is really a long shot as gambles go.
I fear that just as we lost the consumer electronics industry, I sincerely doubt the US car makers can do it on their own, but being bought out by foreign makers who will retain some name brands for nostalgia's sake.

May. 05 2009 10:47 AM
hjs from 11211

scandinavia and most of the EU does great with
socialism, maybe ur thinking of the totalitarianism as in the soviet union

it's not up yet. check back later in the day.

May. 05 2009 10:47 AM
RJ from brooklyn

They can't make money until there's enough volume for large, competitive sales. That takes capital investment upfront, which does not provide the most short-term profit, but over time, as (hopefully) the societal consensus focuses on green products, there will be greater demand.

May. 05 2009 10:34 AM
Steve from Manhattan

I respect Mr. Krugman's opinions, but in my view he is becoming too much of a critic. It's easy to talk about the way policies should be when you are only writing about them, and not involved in trying to implement them. Does he have any intention of leaving academia and column writing, and trying to actually make change happen?

May. 05 2009 10:34 AM
Smokey from LES

If you really want green cars, artificially and permanently raise the cost of gasoline like Europe has done for the last 60 years.

May. 05 2009 10:32 AM
Joe Corrao from Brooklyn

Brian you are silly

May. 05 2009 10:30 AM
Karen from Westchester

JGARBUZ - read his book.
media only gives soundbites.
you don't "get" economics from soundbites.
Krugman is not pro-socialism
That's an absurd and ignorant opinion

May. 05 2009 10:29 AM
Joe Corrao from Brooklyn

big government has screwed us yet again...Krugman is an ass

May. 05 2009 10:29 AM
Joe Corrao from Brooklyn

Obama administration talks a good game...but they are flailing. bailout Chrysler, they go bankrupt, Fiat steps in and moves the business to Mexico...people we are idiots

May. 05 2009 10:27 AM
Joe Corrao from Brooklyn

Obama administration talsk a good game...but they are flailing. bailout Chrysler, they go bankrupt, Fiat steps in and moves the business to Mexico...people we are idiots

May. 05 2009 10:27 AM
Ethan from Upper West Side

We keep hearing that there's a credit crunch, that banks are afraid to lend because they're afraid of defaulting borrowers. In such conditions, the loans that actually do take place should have very high interest rates, since when risk to the lender is high, then the interest rate goes up, reflecting a 'risk premium' demanded by the lender. But I just refinanced my home mortgage at 5% for a fixed ratre 30-year loan: a very low interest rate. What's going on?

May. 05 2009 10:23 AM
Peter from Manhattan

I see how a general pay cut might not make a company more competitive within the US. Globally, however, the picture is different: Europeans will still be stuck with inflexible labor agreements, so that they won't be able to follow suit. Poorer countries will have less room at the bottom, so that the US might still improve its overall competitiveness by taking a pay cut.

May. 05 2009 10:22 AM
John from Jersey/Brooklyn

what is the problem with a japanese-style "slumped" economy? they seem to have been doing OK for the past 15 years.

May. 05 2009 10:20 AM
Kay from NY, NY

Please ask Prof. Krugman if there is any U.S bank that has -- relatively or absolutely -- little exposure to toxic assets.

May. 05 2009 10:19 AM
Jenny from Manhattan Valley

Agree with Alvin and the Chipmunks--so bummed that I can't watch you guys live!

May. 05 2009 10:19 AM
jgarbuz from Queens

Krugman is a Nobel prize-winning nay-sayer and muckraker, who has no solutions. He's very good at criticizing everyone else's, but I hear very little in the way of concrete solutions coming from him other than that government should run everything. But socialism has a proven record of abject failure wherever it has been tried for any length of time. He's had his more than his 15 minutes of fame and basking in the limelight, and I would suggest he take his Nobel prize winnings and deposit in FDIC-back accounts and retire before he wears out his welcome.

May. 05 2009 10:18 AM
kai from NJ-NYC

What does Mr. Krugman think of the counterpoint to his article yesterday in the NYT by Prof. Metzer of CMU that stated that the Fed needs to be ready to handle the prospect of inflation, not deflation, when the time comes?

May. 05 2009 10:15 AM
Noah from Brooklyn

It seems unfair to me that we are actually cutting the wages of the already impoverished, it seems like it would be more fair to use this as an opportunity to create greater wage equality by cutting a lot at at the top and increasing a bit at the bottom, to make a more equal society.

May. 05 2009 10:14 AM
JIM HICKS from Manhattan

The NYT reports the off shore profits of various companies. Some have received TARP funds cuz they LOST money - isn't this fraud?

May. 05 2009 10:13 AM
Peter from Brooklyn from Brooklyn, NY

What does Prof. Krugman think about the Employee Free Choice Act? Would it be good or bad for the economy with our current problems?

May. 05 2009 10:04 AM
Karen from Westchester

In his GREAT explanation for "common people" like me (and like most people in government), "Return to Depression Economics", Krugman says we should not give the financial institutions money, but rather "buy a stake in the system."

What exactly is the difference between bailing out the banks and a process in which the Fed prints money, a safe asset, then uses that money to buy the risky or toxic assets, and finally re-circulates the money through the system? This is a process repeatedly discussed by Simon Johnson in radio and tv interviews, as well as by Liaquat Ahamed when interviewed by Leonard Lopate on his book "Lords of Finance".

I would also LOVE TO KNOW what Krugman thinks of British economist Martin Wolf's "Fixing Global Finance" as no one is currently discussing his global analysis - Krugman discusses the absence of apparent solutions to foreign currency crises, but Wolf sees potential solutions and at least Wolf brings the problem squarely to the front of a discussion that SHOULD be taking place, but isn't.

I am writing a graduate History paper on Wolf and Krugman (and Brenner) at this time - how wonderful it would be to have a response directly from the horse's mouth.

May. 05 2009 09:53 AM

Consumer Credit bill of rights -- why are usury limits excluded?

Do you think a Republican will throw this exclusion back in the Dems' face in the next election as proof of hypocrisy and "business as usual"? (works for me)

With usury limits set at say 15 or 20 percent rather than what for some is now 99% -- billions more would be flowing away from "banks" and directly into the economy.

May. 05 2009 09:49 AM
Gabrielle from Brooklyn

Can you ask why he thinks President Obama is bailing out the banks when economist from both the left and the right are saying it is a bad idea.

Thank you.

May. 05 2009 09:26 AM
David Aronowitz from Riverdale

Ask him about credit card companies abusives practices - why it is legalized and egged by congress.

The government fought hard to curtail mafia loan shark activities, why the congress gave the freedom to credit card companies to butcher the public - to the benefit of the credit card companies CEOs, they are the new mafia.

May. 05 2009 08:13 AM
James B from NYC

To what degree did the inflation of the last 40 years push the financial system towards Adjustable Rate financing thereby creating the ticking time bomb that would find many borrowers in circumstances that would make it impossible for them to service their debts? Add to that spiral the recent practice of no-down-payment borrowing & lending & a great credit bubble was thus created & artificially inflated with no possible end save a disruptive burst. Inflation, (i.e. fiat or unsound money) was the root cause of this massive credit explosion - as it is for nearly every credit bubble. Only sound money policies can create conditions where both lender & borrower can make sound decisions based on the underlying economic factors rather than on speculation or anxiety regarding fluctuating currency values.

May. 05 2009 03:54 AM

Please ask Mr. Krugman what he makes of the work of the late economist Hyman Minsky.

If there is a "Minsky moment" what would define a "Krugman moment"?

May. 05 2009 02:15 AM
j from nyc

read an interesting article in the Week in Review section on 04-02-09 on Fredrick Soddy, who used the laws of thermodynamics [not just Brownian motion, I'm assuming, but all of them] to explain the relation between wealth and debt. Coming from a science background, his work initially makes sense, so what would an economist who's work I generally agree with such as yours, think. [you obviously can do the math] And I also like that 'The Black Swan' includes the human dynamic using fractals, if that's useful here.

May. 05 2009 02:00 AM

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