Now and Later
June 21, 2010 10:18 pm

Paul Krugman

Spend now, while the economy remains depressed; save later, once it has recovered. How hard is that to understand?

Very hard, if the current state of political debate is any indication. All around the world, politicians seem determined to do the reverse. They're eager to shortchange the economy when it needs help, even as they balk at dealing with long-run budget problems....

.....But if we need to raise taxes and cut spending eventually, shouldn't we start now? No, we shouldn't.

Right now, we have a severely depressed economy - and that depressed economy is inflicting long-run damage. Every year that goes by with extremely high unemployment increases the chance that many of the long-term unemployed will never come back to the work force, and become a permanent underclass. Every year that there are five times as many people seeking work as there are job openings means that hundreds of thousands of Americans graduating from school are denied the chance to get started on their working lives. And with each passing month we drift closer to a Japanese-style deflationary trap.

Penny-pinching at a time like this isn't just cruel; it endangers the nation's future. And it doesn't even do much to reduce our future debt burden, because stinting on spending now threatens the economic recovery, and with it the hope for rising revenues.

So now is not the time for fiscal austerity. How will we know when that time has come? The answer is that the budget deficit should become a priority when, and only when, the Federal Reserve has regained some traction over the economy, so that it can offset the negative effects of tax increases and spending cuts by reducing interest rates.

Currently, the Fed can't do that, because the interest rates it can control are near zero, and can't go any lower.......

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More Zombie Lies
June 23, 2010 9:18 pm

Paul Krugman

Things Everyone In Chicago Knows

Which happen not to be true.

It was deeply depressing to see Raguram Rajan write this:

The tsunami of money directed by a US Congress, worried about growing income inequality, towards expanding low income housing, joined with the flood of foreign capital inflows to remove any discipline on home loans.

That’s a claim that has been refuted over and over again. But what happens, I believe, is that in Chicago they don’t listen at all to what the unbelievers say and write; and so the fact that those libruls in Congress caused the bubble is just part of what everyone knows, even though it’s not true.

Just to repeat the basic facts here:

1. The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act.

2. The housing bubble reached its point of maximum inflation in the middle years of the naughties:

3. During those same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of securitization:

while securitization by private players surged:

Of course, I imagine that this post, like everything else, will fail to penetrate the cone of silence. It's convenient to believe that somehow, this is all Barney Frank's fault; and so that belief will continue.

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Will BP be Fox News' tipping point?
June 24, 2010 11:22 am

Eric Boehlert

....And get this: According to the same CNN poll, a microscopic 5 percent of Americans think Obama has been "too tough" on BP. Just 5 percent.

But apparently those 5-percenters all host radio and TV shows, or blog online, because that radical claim that Obama's to blame for creating the hated escrow fund (not to mention for causing the oil spill in the first place), has been exploding within the GOP Noise Machine as pundits, bloggers, and talk show hosts rush to defend BP and denounce one of the most popular things Obama has ever done.

And, of course, helping lead the charge to guard BP from Obama's wicked ways has been Fox News.

Fox News is programmed for Obama dead-enders, that much is clear......

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Conservative hypocrisy in action
June 24, 2010 7:13 pm

The Raytown farmer who posted a sign on a semi-truck trailer accusing Democrats of being the 'Party of Parasites' received more than $1 million in federal crop subsidies since 1995.

But David Jungerman says the payouts don't contradict the sign he put up in a corn field in Bates County along U.S. 71 Highway.

'That's just my money coming back to me,' Jungerman, 72, said Monday. 'I pay a lot in taxes. I'm not a parasite.'

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Ed Schultz: "If you love America, quit voting like you hate Americans"
June 26, 2010 7:28 am

Visit msnbc.com for breaking news, world news, and news about the economy

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