Tuesday, March 31, 2009

Afghanistan?

THE ABSURD TIMES


Illustrations: Above, the number of things wrong that need to be corrected
Above that, a close-up of Cheney
Top: a Photograph of our previous administrators, the Decider and the Decimator
So help me, I wanted to devote this edition to the mistake Obama is making in his adventure in Afghanistan, complete with a copy of Tennyson's "Charge of the Light Brigade," but so many things about the past are just coming to light that Tennyson's "Light" seems irrelevant right now.

The cop that stopped a football player from seeing his dying Mother-in-Law, in Dallas (of course, Texas) says he's "sorry." Hey, love means you never have to say your sorry.

Cheney, while he was V.P. told the Israeli's that Obama was pro-Palestinian and "not ready for the major leagues." Did Cheney ever play baseball? If so, it's clear he is in the Bush Leagues. Interview below.

Everyone is blaming the Bush 43 administration for the World Depression. Blame the last 30 years of Republicanism, starting with Reagen. Not one union supported him for President. Well, one did. PATCO. He showed THEM! Starting with him, almost every economic safeguard Roosevelt put in place has been dismantled in the name of "getting the government off people's backs." What Bush (later Bush 41) called "Voodoo Economics". Well, Reagan started the screw up even though he once was a Democrat until he married Nancy. The effects were so bad, he started to forget what he had done, then that he ever was President, and finally who the hell Nancy was.

We needn't go through all of it, but even Clinton (with his advisor Dick Morris) Dick. Oh yes, the rest of the sentence: destroyed regulations against high-risk speculators. Bush 44, the Decider, just accelerated the greed. Meanwhile, wars in Iraq (two of them, courtesy of the Bushes), many other countries (courtesy Reagan), and the Baltic (courtesy Clinton), all helped us win friends and influence people over seas.

Hey, ever log on and see those adds about IQs? The last I saw said Obama has an IQ of 140. "What's yours?" Well, 140 is pretty good, but the same add lists Sarah Plain as 118. "Say it aint so, Moe." I didn't bother taking the test, but if you try, you will be hit on for money, that's for sure. The last time I too an IQ test I did very well. They asked me to take another a year later and I told them "Are you kidding? According to you I'm a damn Genius and you expect me to take your stupid test again? Do you know the measurement error on those things? Do you know the tendency towards the means? Screw that!" Maybe I'm not that bright, but I know better than to blow a good score. If it ain't broke, don't fix it.

Learning: on the layoffs. Amerikans are wimps. Look at the French for an example of real manhood! Caterpillar laid off 700 workers so the workers are holding 5 top administrators hostage in their main office. Don't be a wuss! Kidnap your nearest CEO, preferable from AIG!

Now Obama is in England for the G20. I hope he looks out the window at all the protestors.
Anyway, from Democracy Now, an interview with Seymour Hersch. (I'd post his article here, but he is pretty paranoid about things -- as he has every right to be, by the way.) Here goes:

AMY GOODMAN: Our guest is the Pulitzer Prize-winning journalist Seymour Hersh. His piece in the latest issue of The New Yorker magazine is called "Syria Calling: The Obama Administration's Chance to Engage in a Middle East Peace."

Sy, you begin, "When the Israelis' controversial twenty-two-day military campaign in Gaza ended, on January 18th, it also seemed to end the promising [peace] talks between Israel and Syria." What were those talks?

SEYMOUR HERSH: There was a series of more or less secret talks. They initially were secret, but they became known. The Turkish government intervened. And Turkey and Syria have not always been good friends, but there's a great relationship between the leadership of Turkey and President Bashar Assad of Syria now. And they began talks about—the Turks have also great relationships, very close relationships—or did, until Gaza—with the Israelis. So it was a natural sort of mix.

The Turks mediated or brokered a series of—I think there were four long meetings about getting the Golan Heights, which was an area, a large area, seized by the Israelis after the '67 war and, contrary to international law, not returned to the Syrians. The Syrians have always wanted it back, as any country would. You know, it's native soil. And so, the talks were very—what I was writing about, I started doing this last fall, because I was told how far along the talks were. They had resolved a lot of questions. There were always going to be complicated questions of water, because the Golan Heights is a mountainous region, and there's a great deal of water that pours into the Jordan Valley and into Israel. But once the riparian rights—even those rights were discussed and worked out. And they were on a track to begin almost direct negotiations, when Gaza broke out. So the story I had worked on for months at The New Yorker was sort of scrapped, obviously, because of Gaza.

And then, to my surprise, a few weeks after the war, after both the Turkish president, Erdogan, and Bashar Assad both were incredibly harshly critical of Israel for the overzealous bombing, etc., etc., we all know about at Gaza and the collateral deaths—they were so critical. I had sent an email message to Assad, President Assad, who I've seen three or four times in the past six or so years. And to my surprise, he responded with an email, saying essentially, "Look, I want to go ahead with talks." And he is still talking that way. And his goal is—it's not just some sort of quixotic thing. The Israelis want to go ahead with talks, despite Gaza.

And the Syrian goal is simply, I think—as I write, the Syrian goal was to get President Obama, who is the great hope of everybody in the Middle East and, I think, everybody in the world—we're all worried about Afghanistan, for sure, but nonetheless, the Syrians want Obama and the Americans to broker talks, and the idea being, if you can get this administration, our White House, into a possible settlement of the Golan Heights dispute, land for peace, we can get a regional peace process going.

And then the United States would have to—in Bashar Assad's view, it would be not—very logical for the Americans to also accept the idea that Iran should participate. And we just heard in your news broadcast today Richard Holbrooke talking about the inevitability of using—having Iran involved, because for the United States, you have to look at the idea of having Syria, Turkey and Iran all together, all border countries playing an enormous role in making sure that the Iraqi—as we walk out of Iraq, and making sure that that happens safely—they have a lot to say about what's going to happen inside Iraq. They can be moderating influences. And so, you see the potential for an enormous sort of a change in the paradigm.

AMY GOODMAN: Sy Hersh, can you talk about Vice President Cheney's comments about Obama to Israeli officials after he was elected but before he was inaugurated?

SEYMOUR HERSH: What I wrote about, in doing my reporting, I did discover that Cheney, of course, to no one's surprise, if you certainly read what I wrote about Cheney and the White House's involvement in the Israeli attack on Lebanon three years ago—Cheney was deeply involved with the Israelis in the planning for Gaza, resupplying them with weapons and also providing intelligence through our—the offices we have in Egypt, our intelligence offices there. So we were deeply involved in helping the Israelis do the attack on Gaza, with intelligence, etc., and weaponry.

And he was, not surprisingly, very hostile to the election of Obama. And he called him a lot of pejorative names, but one of them that we published that dealt with—I think he said, "He will never make it in the major leagues," and that kind of language.

And more specifically, what I wrote about that actually is, I think, far more interesting is that Obama—and when he was in transition, his transition team let the Israelis know that—if you remember, the bombing of Gaza began in late December of '08 and ended around the 18th of January, 18th. That wasn't an accident. Obama told the Israelis, "I do not want bombing in Gaza or Israeli troops in Gaza at the time of my inauguration." And that was—it's not clear whether the Israelis were going to stay there. But the hunch is, they planned to go another week. They stopped short.

And as I write, they complained bitterly to Cheney, who communicated that distress to General Jones, who is the new head of the National Security—former Marine General Jim Jones, who's head of now the National—as I said, national security adviser. And Jones was the national security adviser in waiting, and he worked out a deal, which was that the Israelis would stop short, as Obama wanted; in return, the Obama administration, once in office, would not interfere with a prearranged flow of arms that was going to Israel. In other words, we were going to keep the supply of smart bombs and other weaponry going past the inauguration. And so, the message to Israel, perhaps, was, "Well, we're still your friends, but not a blank check." And so, that was a very interesting—it's just a couple of graphs in my piece, but a very interesting couple of graphs.

AMY GOODMAN: Yeah. I wanted to play for you, Sy Hersh, the comments of the Syrian president, Bashar al-Assad. He was in Doha Monday attending a summit of the Arab League. Arab leaders are reportedly set to warn Israel time is running out to accept a longstanding peace offer. Syrian President Assad endorsed future peace talks with Israel but said the incoming Israeli Prime Minister Benjamin Netanyahu is not a serious partner.

    PRESIDENT BASHAR AL-ASSAD: [translated] Since we released the Arab Peace Initiative, we do not have a real partner in the peace process. Israel has killed the Arab initiative and not the Doha summit, as some people are trying to suggest.


AMY GOODMAN: Your response, Sy Hersh?

SEYMOUR HERSH: Well, that's not inconsistent. His argument all along has been that the only way you can really get a systematic peace process going now is bringing in America to broker it. And the American role would be important. It's a tremendous challenge for the Obama administration diplomatically, which is to nurse an agreement over the Golan Heights, which everybody seems to want, and use that to start talking about regional peace.

And that would mean bringing in Iran, countries like Iran, into the process, at the same time trying to hold off the Israelis, who—I think the main reason Israel would be interested in the Golan Heights settlement is they see a settlement with Syria over the Golan Heights as an issue that would isolate the Iranians from the Syrians and, therefore, give the Israelis more leverage to go after Iran, if they choose to do so, if, this year or next year, the Israelis view Iran as a strategic threat. They don't view—this is, I would say, certainly Ehud Barak, the defense minister, he does—who's into the government now. He does not view the Palestinian issue, whether Hamas or Fatah, as strategic. That's a tactical issue.

The main goal for this government in Israel now is going to be to try and do something to take care of the Iranians. And if they have to deal with Israel—I mean, with Syria and seal that part of the border off and protect themselves and get a settlement there to put more pressure on Iran, that's the way they view it. The problem is that the Syrians have a different motive for dealing with Israel. They're not interested in walking away from the Iranian agreement.

So Bush—or, the Obama administration has to somehow walk its way through all of these issues and keep the Israelis happy and also go forward, because, as I said, it's almost impossible to consider you could—you're going to be able to extract ourselves from Iraq as peacefully as we want to. We've got a lot of boys to get out of there and a lot of damage to repair there. And the idea of having all three of the countries—as I said, Turkey, Syria and Iran—supporting us in that operation is overwhelmingly attractive.

AMY GOODMAN: Let me play a clip for you of President Carter. I wanted to ask you about the emerging positions of the Hamas leadership on accepting a long-term agreement with Israel. Carter has met with Hamas officials and relayed their willingness to accept a peace deal with Israel. This is President Carter speaking last April.

    JIMMY CARTER: They said that they would accept a Palestinian state on the 1967 borders, if approved by Palestinians, and that they would accept the right of Israel to live as a neighbor next door in peace, provided the agreements negotiated by Prime Minister Olmert and President Abbas were submitted to the Palestinians for their overall approval.


AMY GOODMAN: Can you talk about what President Carter is saying and also President Carter's relationship with President Obama, Sy?

SEYMOUR HERSH: Yeah, sure. That's one of the most amazing things. You know, Jimmy Carter has been a pariah for the American Jewish community and for Israel ever—in recent years because of just the kind of conversations you've heard. He's gone and made visits to the Hamas leadership, and he's gone to see Bashar Assad of Syria.

It turns out he has a pretty profound relationship with Obama. He met with him privately about ten, twelve days before the inauguration. I wrote about that meeting. It was just the—Carter and his wife and the President, Obama, and his aide David Axelrod. And since then, I think there's even been more—perhaps even more private meetings. And so, I do understand that it seems inevitable, of course, they would discuss Hamas.

And the fact of the matter is that what Mr. Carter said, Khaled Meshaal, the head who runs the Hamas office in Damascus—I actually interviewed in this piece in The New Yorker—he says literally the same thing. In a sense, he said he would be—Hamas leadership would be willing to leave Syria, as Bush always wanted, if there was an agreement on the Golan Heights. He said he would not stand in the way of Bashar Assad. And he also said, Khaled Meshaal, who said that Iran would be against this kind of an agreement, they would be isolated, as the Israelis think. It was pretty straightforward stuff. What we may—and Meshaal has said to me, in that visit and previous visits, "The Israelis keep on wanting me to talk about Israel publicly and say I recognize Israel. For a man of the resistance, that would be suicidal. But what I do say is—and I've said this, too, publicly"—and he said it to Carter—"I understand there's a state called Israel." And he's not—he just won't say what the Israelis want him to say.

The whole question of how Bush presented things and how Obama presents things, I really—it's quite amazing. Obama talks about mutual respect. And again, in this article, I mention that instead of going to the Syrians and demanding that they kick Hamas out of Syria—the Hamas has had an office there for years in Syria, much to our anger, the Bush administration's anger—Hillary Clinton, to her everlasting credit, sent two of her aides to see the Syrians a few weeks ago, and their message was so different. They said, "Look, we know you won't kick out Hamas. That's an act you won't do. We won't shame you and ask you to shame yourself. What we want you to do, instead of kicking them out, is to try and help us be—help us to get Hamas to be more moderate." Similarly, about Hezbollah, instead of demanding that Syria, as part of any agreement, disavow Hezbollah, disavow Hamas or disavow Iran, what the Obama people, the message they passed in Syria was, "Look, we think that perhaps the Bush administration was wrong or overzealous in thinking how much control Syria has over Hezbollah. We're reevaluating that. There may not be as much direct control."

So you have a new government in place that, I must tell you, for all of the caviling and for all of the concerns I have about Afghanistan and other actions of Mr. Obama, what he's doing in this part with Syria and Hamas is pretty interesting. He seems to be more willing to accept the reality than the Bush administration was. They saw a world that I don't think existed.

AMY GOODMAN: Seymour Hersh, I want to thank you very much for being with us. I do want to ask, you never got to talk to David Axelrod about this article? We have ten seconds.

SEYMOUR HERSH: I talked to him about Carter. He was very open. But once I started talking about what Obama wanted to do with the—in terms of getting the Israelis to stop the war short of the inauguration, the war on Gaza, I was treated exactly as Bush would treat me, you know, which is, "Are you kidding?" No response, no response, make appointments, don't do it. But that's normal for White Houses. They like the press only—every White House wants the press exactly the way they want it, which is, they want to feed you and take care of you. If you raise questions, they don't like you. Big deal.

AMY GOODMAN: Pulitzer Prize-winning journalist Seymour Hersh, joining us today. His latest article in The New Yorker magazine is called "Syria Calling: The Obama Administration's Chance to Engage in a Middle East Peace."


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Tuesday, March 24, 2009

Economy: Stiglitz -- End of Series

THE ABSURD TIMES

Illustration:The Capitalist World system.

Below we have an interview with another Nobel Prize winner. He co-wrote the 3 Trillion Dollar War which was a more accurate estimate of the cost of Iraq. Funny, a trillion here, a trillion there .... Anyway, now that Friedman and his followers have screwed things up, I guess I once again understand economics. This is the last of the series.

Joseph Stiglitz was awarded the Nobel Prize for Economics in 2001. I spoke with him Tuesday about the Wall Street meltdown.

Nathan Gardels: Barack Obama has said the Wall Street meltdown is the greatest financial crisis since the Great Depression. John McCain says the economy is threatened, but fundamentally strong. Which is it?

Joseph Stiglitz: Obama is much closer to the mark. Yes, America has talented people, great universities and a good hi-tech sector. But the financial markets have played a very important role, accounting for 30 percent of corporate profits in the last few years.
Those who run the financial markets have garnered those profits on the argument they were helping manage risk and efficiently allocating capital, which is why, they said, they "deserved" those high returns.

That's been shown to be not true. They've managed it all badly. Now it has come back to bite them and now the rest of the economy will pay as the wheels of commerce slow because of the credit crunch. No modern economy can function well without a vibrant financial sector.

So, Obama's diagnosis that our financial sector is in desperate shape is correct. And if it is in desperate shape, that means our economy is in desperate shape.

Even if we weren't looking at the financial turmoil, but at the level of household, national and federal debt there is a major problem. We are drowning. If we look at inequality, which is the greatest since the Great Depression, there is a major problem. If we look at stagnating wages, there is a major problem.

Most of the economic growth we've had in the past five years was based on the housing bubble, which has now burst. And the fruits of that growth have not been shared widely. In short, the fundamentals are not strong.

Gardels: What ought to be the policy response to the Wall Street meltdown?

Stiglitz: Clearly, we need not only re-regulation, but a redesign of the regulatory system. During his reign as head of the Federal Reserve in which this mortgage and financial bubble grew, Alan Greenspan had plenty of instruments to use to curb it, but failed. He was chosen by Ronald Reagan, after all, because of his anti-regulation attitudes.

Paul Volcker, the previous Fed Chairman known for keeping inflation under control, was fired because the Reagan administration didn't believe he was an adequate de-regulator. Our country has thus suffered from the consequences of choosing as regulator-in-chief of the economy someone who didn't believe in regulation.

So, first, to correct the problem we need political leaders and policymakers who believe in regulation. Beyond that, we need to put in place a new system that can cope with the expansion of finance and financial instruments beyond traditional banks.

For example, we need to regulate incentives. Bonuses need to be paid on multiyear performance instead of one year, which is an encouragement to gambling. Stock options encourage dishonest accounting and need to be curbed. In short, we built incentives for bad behavior in the system, and we got it.

We also need "speed bumps." Every financial crisis historically has been associated with the very rapid expansion of particular kinds of assets, from tulips to mortgages. If you dampen that, you can stop the bubbles from getting out of control. The world wouldn't disappear if we expanded mortgages at 10 percent a year instead of 25 percent a year. We know the pattern so well we ought to be able to do something to curtail it.

Above all, we need a financial product safety commission just like we have for consumer goods. The financiers were inventing products not intended to manage risk but to create risk.

Of course, I believe strongly in greater transparency. Yet, in terms of regulatory standards, these products were transparent in a technical sense. They were just so complex no one could understand them. If every provision in these contracts were made public, it wouldn't have added any useful information about the risk to any mortal person.

Too much information is no information. In this sense, those calling for more disclosure as the solution to the problem don't understand information.

If you are buying a product, you want to know the risk, pure and simple. That is the issue.

Gardels: The mortgage-backed securities behind the meltdown are held across the world by banks or sovereign funds in China, Japan, Europe and the Gulf. What impact will this crisis have on them?

Stiglitz: That is true. The losses of European financial institutions over sub-prime mortgages have been greater than in the U.S.

The fact that the U.S. diversified these mortgage-backed securities to holders around the world -- thanks to globalization of markets -- has actually softened the impact on the U.S. itself. If we hadn't spread the risk around the whole world, the downturn in the U.S. would be much worse.
One thing that is now being understood as a result of this crisis is the information asymmetries of globalization. In Europe, for example, it was little understood that U.S. mortgages are non-recourse mortgages -- if the value of the house becomes less than the value of the mortgage, you can turn the key over to the bank and walk away. In Europe, the house is collateral, but the borrower remains on the hook for the amount he borrowed no matter what.

This is a danger of globalization: Knowledge is local because you know far more about your own society than others.

Gardels: What, then, is the ultimate impact of the Wall Street meltdown of market-driven globalization?

Stiglitz: The globalization agenda has been closely linked with the market fundamentalists -- the ideology of free markets and financial liberalization. In this crisis, we see the most market-oriented institutions in the most market-oriented economy failing and running to the government for help. Everyone in the world will say now that this is the end of market fundamentalism.

In this sense, the fall of Wall Street is for market fundamentalism what the fall of the Berlin Wall was for communism -- it tells the world that this way of economic organization turns out not to be sustainable. In the end, everyone says, that model doesn't work. This moment is a marker that the claims of financial market liberalization were bogus.

The hypocrisy between the way the U.S. Treasury, the IMF and the World Bank handled the Asian crisis of 1997 and the way this is being handled has heightened this intellectual reaction. The Asians now say, "Wait a minute, you told us to imitate you in the U.S. You are the model. Had we followed your example we would be in the same mess. You may be able to afford it. We can't".

Monday, March 23, 2009

Economy: Small world

THE ABSURD TIMES

Illustration: I don't remember what Dali called it, but my title for it is "Our Economy"

I sent out some material about Paul Krugman on Sunday. This is a transcript of him interviewed by Amy Goodman the next day. Hm.

AMY GOODMAN: Treasury Secretary Timothy Geithner today is unveiling the Obama administration's plan to finance the purchase of up to $1 trillion in so-called toxic assets from banks and other ailing financial institutions. The plan relies on private investors, namely hedge funds and private equity firms, to team up with the government to relieve banks of assets tied to loans and mortgage-linked securities. There have been virtually no buyers of these assets thus far because of their uncertain risk. As part of the program, the government plans to offer subsidies in the form of low-interest loans to coax private funds to form partnerships with the government to buy troubled assets from banks. This is intended to unclog the balance sheets of banks and allow them to resume normal lending.

Also, the Obama administration this week is expected to announce new proposals for financial regulation, executive pay, accounting standards and other issues, ahead of the G20 summit in London on April 2nd. The new economic proposals come as Congress is to begin debating the administration's $3.6 trillion budget proposal for next year.

Meanwhile, public outrage over the AIG bonus scandal has further undermined support for Timothy Geithner as Treasury Secretary. AIG is paying out over $165 million in bonuses after receiving a $170 billion taxpayer bailout. Geithner has been criticized in Congress and elsewhere for not doing more to block the AIG bonuses and his overall response to the financial crisis.

In an interview broadcast last night on 60 Minutes, President Obama expressed strong support for Geithner. He was interviewed by 60 Minutes correspondent Steve Kroft.

    STEVE KROFT: Your Treasury Secretary, Tim Geithner, has been under a lot of pressure this week, and there have been people in Congress calling for his head. Have there been discussions in the White House about replacing him?

    PRESIDENT BARACK OBAMA: No.

    STEVE KROFT: Has he volunteered to or come to you and said, "Do you think I should step down?"

    PRESIDENT BARACK OBAMA: No, and he shouldn't. And if he were to come to me, I'd say, "Sorry, buddy, you still got the job." But look, he's got a lot of stuff on his plate, and he is doing a terrific job. And I take responsibility for not, I think, having given him as much help as he needs.


AMY GOODMAN: Geithner is scheduled to testify before the House Financial Services Committee on Thursday about overhauling financial regulation.

Paul Krugman is a Nobel Prize-winning economist, professor of economics and international affairs at Princeton University, and a columnist at the New York Times. His latest book is The Return of Depression Economics and the Crisis of 2008. His column in today's Times is headlined "Financial Policy Despair." He joins us on the phone from his home in New Jersey.

Welcome to Democracy Now!, Paul.

PAUL KRUGMAN: Good morning, Amy.

AMY GOODMAN: Well, you say, "Zombie ideas have won." Why are you calling that Timothy Geithner's plan today?

PAUL KRUGMAN: A zombie idea is an idea that you keep on killing, because it's a bad idea, but it just keeps on coming back. And what this is is we've had this idea since Henry Paulson came out with his plan six months ago, the Bush administration, that the real problem is that the market is undervaluing all of these toxic assets, and what we need to do is have taxpayers go in and buy them at a fair price, and that will solve all of our financial problems. And that's what happened. The Geithner plan is a complicated, disguised variant on the same idea. It's the zombie that you keep killing, and it just keeps coming back.

AMY GOODMAN: Called "cash for trash"?

PAUL KRUGMAN: Yeah, that's—that was the phrase that was out there six months ago, which I picked up. And yeah, it's basically saying that, you know, there's nothing really fundamentally wrong with our banking system; there's just this crisis of confidence, and so nobody wants to buy, you know, asset-backed securities, nobody wants to buy stuff that's ultimately backed by home mortgages, and if only we could get people to see that these things are really pretty decent assets, then the banks will be in fine shape. And that's the trouble. You know, there's an argument that says maybe they were somewhat underpriced, but to make this the centerpiece of your financial rescue plan is just—well, as I wrote in the column, it leaves me with a feeling of despair.

AMY GOODMAN: Members of the Obama administration hit the Sunday talk show circuit yesterday to drum up support for the administration's plan to purchase up to a trillion dollars in troubled mortgages and other so-called toxic assets. Austan Goolsbee, a key White House economic adviser, was on Face the Nation. Harry Smith of CBS News quoted from your writing about the administration's plan. This is an excerpt.

    HARRY SMITH: There's been a lot of negative press about this thing that hasn't even been unveiled yet, and Paul Krugman, in his blog today, said, "For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose."

    AUSTAN GOOLSBEE: I don't think that's an accurate description. I mean, if the government doesn't make money, the private sector doesn't make money either. I mean, these guys are coming in in a partnership, and one of the reasons you want to have the partnership is precisely so that, A, the government doesn't massively overpay for these troubled assets that are on the balance sheets, and B, so that everybody's got skin in the game and you don't get into situations where you're paying guys for failure.


AMY GOODMAN: Paul Krugman, your response?

PAUL KRUGMAN: The important thing is not the shared equity. I'm sorry, it's hard to avoid lapsing into jargon here. But 85 percent, at least according to the counts over the weekend, 85 percent of the money is going to be a loan from the government, which is a non-recourse loan, which means that it's backed only by the assets that these guys are buying, which means that if the thing loses more than 15 percent of its value, which is highly, you know, possible, given how uncertain these things are worth, then the investors, the private investors, just walk away. So there's—exactly, it's a heads I win, tails you lose. If the stuff—you buy something at $100 and it goes up to $150, you make $50. You buy it at $100 and it goes down to $50, then you only lose $15, because the other $35 gets even by the taxpayer. So it's a—it's the same thing.

It's basically what happened with savings and loans in the 1980s. They were deregulated and basically put in the position where the deposits were guaranteed, but the owners of the banks could do whatever they wanted, and so they took these huge risks, and most of the risks turned out bad. But if the risks turned out bad, it was the taxpayers' problem, not the bank owners' problem. Same thing here. They're deliberately setting it up, so that there's this huge incentive to—you know, basically where the upside belongs to the private investors, but most of the downside belongs to you and me.

AMY GOODMAN: So you socialize the debt, you privatize the profit. Why—

PAUL KRUGMAN: Yes, it's—you know, it's, yeah, lemon socialism. The minuses are the taxpayers; the pluses are the private investors.

AMY GOODMAN: Why doesn't the government just buy all up all of the toxic assets then, like the FDIC does?

PAUL KRUGMAN: Well, it's actually—the FDIC doesn't—the FDIC guarantees a bank's debts, basically, so the deposits are secure, and then if it says the bank is bankrupt, then it goes in and it seizes the bank and then sells the toxic stuff for whatever it can get. That's what I advocate; that's what we ought to be doing. They are—I think they're just daunted by the scale of this thing. The FDIC normally does, you know, two or three banks a week, even in bad times, and they're small banks. Here we're talking about quite possibly Citigroup, which is $2 trillion in assets. It's a very big thing. And I think the reason they keep on coming back, the reason the zombie ideas won't stay dead, is the lure of an easy solution, that you can just wave a magic wand and the problem goes away, and they're still looking for magic.

AMY GOODMAN: We have to break just for sixty seconds, then we come back to Paul Krugman, Nobel Prize-winning economist, professor of economics, Princeton, columnist at the New York Times. Stay with us.

[break]

AMY GOODMAN: Our guest, the Nobel Prize-winning economist, Paul Krugman, professor at Princeton, New York Times columnist. Do you think Timothy Geithner, the Treasury Secretary, Paul, should step down?

PAUL KRUGMAN: You know, I don't have a strong view on that. It's certainly becoming a problem, and he's really got to clean up his act if he wants to stay there. But it's just—it's been really—you know, basically, look, this is not Geithner. Ultimately, the buck stops in the Oval Office. The question is, why is President Obama going with the soft side, the hope over analysis, on this stuff? So I'm not—I don't have a big commitment on Geithner, one way or the other.

AMY GOODMAN: Can I ask you something about the AIG bonuses that have caused such an uproar? I mean, why wasn't there strict regulations about how the stimulus money could be used, how the TARP could be used? Why wasn't there regulation here?

PAUL KRUGMAN: Well, if I was going to take the side of the government people, I'd say it's hard to write those regulations in a way that doesn't have unintended consequences. You know, there was a time when they tried to put limits on CEO pay, and it ended up leading to the explosion of stock options, which was not a good thing.

But I think it basically comes down to the mindset, that the view still, apparently, dominant in—even in this administration is that there's nothing really fundamentally wrong with the system. There were some mistakes, and there was some bad luck, but we don't want to shake up the system too much. We don't want to really rebuild it. We don't want to tear up the relationships with those people who we thought were so smart and now look so dumb, really are smart, and we want to keep them on the job. It's a problem. I think there's too much conventionality. To some extent, the Obama administration is still partying like it's 2006.

AMY GOODMAN: Paul Krugman, what would a new system look like? What would you advocate?

PAUL KRUGMAN: I think, in the end, we're going to have to go back to something that is kind of like the system that emerged from the New Deal, which was tightly regulated banks and financial institutions, limits on risk taking, fairly high taxes for high earners, which—it turns out that, you know, low tax rates create incentives, but the incentives are actually to play dangerous games with other people's money. A lot of things need to be updated for the twenty-first century and information technology and so on, but basically, our grandfathers got this thing right. Our grandfathers understood that finance is useful but dangerous and needs to be very tightly hedged about with regulations.

AMY GOODMAN: You write, "The Obama administration has apparently made the judgment that there would be a public outcry if it announced a straightforward plan along these lines," which is, you know, government buying up the troubled assets, "so it has produced what Yves Smith calls 'a lot of bells and whistles to finesse the fact that the government will wind up paying well above market [value] for"—and you can't say the rest.

PAUL KRUGMAN: Yeah, I still can't say the rest, which was not Times style. But yeah, ultimately, when you get the—when you get through the complexities and the salesmanship, this is just a complicated way of having the government pay, having you and me pay, for buying these assets at more than any private investor is willing to pay for them.

AMY GOODMAN: You talk about why you're so vehement about this right now, why you see this is the critical moment.

PAUL KRUGMAN: I think—this is a political judgment. We can argue this back and forth. But I think that Obama doesn't get many shots at this, maybe just one. There's already a huge public outcry, which doesn't distinguish between the things we need to do and the things that were just mistakes. And for Obama to go and do this plan and put a lot of taxpayer money on the line and for it not to work, which I'm almost certain is what would happen, I don't think he can come back to Congress for a plan that might actually work. I think that there's a real—the stimulus is something of the same thing. You have to do this right, right away, because the political mood is getting ugly, for good reason, and there's not a lot of patience with failed approaches, especially failed approaches that seem like your administration is just too close to Wall Street.

AMY GOODMAN: Paul Krugman, can you talk about the role of foreign sovereign wealth funds and explain what they are?

PAUL KRUGMAN: Oh, yeah. It's just when a foreign government has a bunch of money which it is investing in the United States or in other countries, and as opposed to—this is when you do something beyond just plain parking lots of money in bank deposits or US government debt, which is where most of the foreign money is. You know, I think that's a much exaggerated issue. It's—yeah, these are governments playing with large sums of money. At least so far, all the evidence is that they've been really pretty dumb investors. The Chinese appear to have given us a substantial subsidy by buying a lot of stocks at the top of the market and losing them. So I'm not that—I don't think it's a central issue.

AMY GOODMAN: And this issue of counterparties, a word we're just learning right now, that AIG gets all of these billions of dollars, and they use some of it to pass through to banks once—well, to entities like Goldman Sachs, to UBS, which had to pay a massive fine to the US government, so we're paying their fine for violating us?

PAUL KRUGMAN: Well, this is—the counterparties—basically, think of the financial system as this web of connections. And the reason that we're stepping in to rescue these companies in the first place is that we're afraid that if you break the web at one point, it unravels across a pretty wide range. And that's not just a theory. When Lehman Brothers was allowed to fail, in fact, a huge gaping hole opened up across the financial system. So this is the reason that we're rescuing them in the first place.

Now, the only thing you can say is that if we're going to be doing this, then we do need to look hard at who else we're rescuing, and we need to say, "Look, you guys have to make some sacrifices as part of this, as well." What we're seeing right now is that it's basically all free money from the taxpayer with no quid pro quo. And that gets to the heart of the dispute over what our policy is right now.

AMY GOODMAN: Finally, Paul Krugman, has this made you reevaluate your support of NAFTA, the whole push for sort of unregulated globalization, why so many people took to the streets in the Battle of Seattle, for example?

PAUL KRUGMAN: Yeah, the answer is no. There's a huge distinction between letting actual trade in goods, stuff, real physical stuff, proceed, which is terribly important to the poorest countries, above all—when somebody asks, you know, why am I in favor of, more or less, free trade, my answer is, I'm really thinking about countries like Bangladesh, which literally are only able to keep their heads above water by their ability to sell labor-intensive stuff, thanks to their low wages. It's really critical.

I've never been a fan of unregulated movement of capital internationally. This was a big fight back in the late '90s between some of us who say, you know, "We need to regulate, we need to limit this stuff," and people who said, "Oh, no. You have to trust the markets." And what's—it's the hot money that's the issue here; it's not the auto parts from Mexico. That's a different discussion. It's the hot money from all over the world that is the crisis right now.

AMY GOODMAN: And the UN panel that will next week recommend the world ditch the dollar as its reserve currency in favor of a shared basket of currencies?

PAUL KRUGMAN: You know, there have been millions of plans—well, I'm exaggerating, but there have been many plans along those lines. That's not a decision that can be taken by an international body. The dollar is the reserve currency because people think it's the safest place to park their money. The euro is a natural competitor, except that the Europeans are as messed up in their policies as we are, if not more so, right now. But the way to deal with that is not to have some body agree that we're going to do something different, but to simply have the world—have the natural competitors to the dollar make themselves worthy of the competition.

AMY GOODMAN: Paul Krugman, I want to thank you for being with us, Nobel Prize-winning economist, professor of economics at Princeton University, and columnist with the New York Times. His latest book is called The Return of Depression Economics and the Crisis of 2008. Thanks so much for joining us. He joined us from New Jersey.

PAUL KRUGMAN: Thanks a lot.

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Sunday, March 22, 2009

The Economy: Nobel Prize Winner

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Last month, in his big speech to Congress, President Obama argued for bold steps to fix America's dysfunctional banks. "While the cost of action will be great," he declared, "I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade."

Many analysts agree. But among people I talk to there's a growing sense of frustration, even panic, over Mr. Obama's failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.

Here's how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.

Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.

Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as "toxic waste," are really worth much more than anyone is actually willing to pay for them - and that if these assets were properly priced, all our troubles would go away.

Thus, in a recent interview Tim Geithner, the Treasury secretary, tried to make a distinction between the "basic inherent economic value" of troubled assets and the "artificially depressed value" that those assets command right now. In recent transactions, even AAA- rated mortgage-backed securities have sold for less than 40 cents on the dollar, but Mr. Geithner seems to think they're worth much, much more.

And the government's job, he declared, is to "provide the financing to help get those markets working," pushing the price of toxic waste up to where it ought to be.

What's more, officials seem to believe that getting toxic waste properly priced would cure the ills of all our major financial institutions. Earlier this week, Ben Bernanke, the Federal Reserve chairman, was asked about the problem of "zombies" - financial institutions that are effectively bankrupt but are being kept alive by government aid. "I don't know of any large zombie institutions in the U.S. financial system," he declared, and went on to specifically deny that A.I.G. - A.I.G.! - is a zombie.

This is the same A.I.G. that, unable to honor its promises to pay off other financial institutions when bonds default, has already received $150 billion in aid and just got a commitment for $30 billion more.

The truth is that the Bernanke-Geithner plan - the plan the administration keeps floating, in slightly different versions - isn't going to fly.

Take the plan's latest incarnation: a proposal to make low-interest loans to private investors willing to buy up troubled assets. This would certainly drive up the price of toxic waste because it would offer a heads- you-win, tails-we-lose proposition. As described, the plan would let investors profit if asset prices went up but just walk away if prices fell substantially.

But would it be enough to make the banking system healthy? No.

Think of it this way: by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they're needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don't need or deserve to be rescued.

And this means that the government would have to lay out trillions of dollars to bring the financial system back to health, which would, in turn, both ensure a fierce public outcry and add to already serious concerns about the deficit. (Yes, even strong advocates of fiscal stimulus like yours truly worry about red ink.) Realistically, it's just not going to happen.

So why has this zombie idea - it keeps being killed, but it keeps coming back - taken such a powerful grip? The answer, I fear, is that officials still aren't willing to face the facts. They don't want to face up to the dire state of major financial institutions because it's very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.

But this refusal to face the facts means, in practice, an absence of action. And I share the president's fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.


From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/znet/viewArticle/20825
******************************

Krugman earned his B.A. in economics from Yale University in 1974 and his Ph.D. from the Massachusetts Institute of Technology (MIT) in 1977. From 1982 to 1983, he spent a year working at the Reagan White House as a staff member of the Council of Economic Advisers. He taught at Yale University, MIT, UC Berkeley, the London School of Economics, and Stanford University before joining the faculty of Princeton University in 2000. He is also currently a centenary professor at the London School of Economics, and a member of the Group of Thirty international economic body as well as the Council on Foreign Relations.

When Bill Clinton came into office in 1993, he considered Krugman for a leading post; Krugman was flown out for a meeting in Arkansas. Krugman's outspokenness was reported to be "the main reason the Clinton administration didn't offer him a job."[8] Krugman says he would not have been interested in such a job; he told Newsweek, "I'm temperamentally unsuited for that kind of role. You have to be very good at people skills, biting your tongue when people say silly things."[8] In his New York Times blog, Krugman repeated that statement, saying that he was "temperamentally unsuited to politics".[9]

[edit] Nobel Prize

Krugman was awarded the Nobel Memorial Prize in Economic Sciences, the sole awardee for 2008. This award, created in 1968 by the Swedish central bank in Alfred Nobel's memory, includes a prize of about $1.4 million and was awarded to Krugman for his work associated with New Trade Theory.[10][11] In the words of the prize committee, "By having integrated economies of scale into explicit general equilibrium models, Paul Krugman has deepened our understanding of the determinants of trade and the location of economic activity."[12]

[edit] Academic contributions

Paul Krugman has done extensive work in international economics, including work on international trade, economic geography, and international finance. According to the Research Papers in Economics project, he is among the 50 most influential economists in the world today.[13] Krugman's International Economics: Theory and Policy, co-authored with Maurice Obstfeld is a standard introductory textbook on international economics. He also writes on economic topics for the general public, sometimes on international economic topics but also on income distribution and public policy.

[edit] International trade theory

As the Nobel Prize Committee explains, Krugman's main contribution is to analyze the impact of economies of scale in international trade. Prior to Krugman's work, trade theory (see David Ricardo and Hecksher-Ohlin model) emphasized trade between countries with very different characteristics, like a poor country exporting agricultural goods to a rich country in exchange for industrial products. However, in the 20th century, an ever larger share of trade occurred between countries with very similar characteristics. For example, the Nobel committee mentions Sweden exporting Volvo cars to Germany while Germany exports BMW cars to Sweden.

Krugman's explanation of trade between similar countries was proposed in a 1979 paper in the Journal of International Economics. He assumes that consumers prefer a diverse choice of brands, and that production favors economies of scale. Consumers' preference for diversity explains the survival of different versions of cars like Volvo and BMW.[14] But because of economies of scale, it is not profitable to spread the production of Volvos all over the world; instead, it is concentrated in a few factories and therefore in a few countries (or maybe just one). This logic explains how each country may specialize in producing a few brands of any given type of product, instead of specializing in different types of products.

Most models of international trade nowadays follow Krugman's lead, incorporating economies of scale in production and a preference for diversity in consumption. This way of modeling trade has come to be called New Trade Theory.

When there are economies of scale in production, it is possible that countries may become 'locked in' to disadvantageous patterns of trade.[15] Nonetheless, trade remains beneficial in general, even between relatively similar countries, because it permits firms to save on costs by producing at a larger, more efficient scale, and because it increases the range of brands available and sharpens the competition between firms.[16] Therefore, Krugman has usually been supportive of free trade and globalization[17], and critical of industrial policy. (He writes on p. xxvi of his book The Great Unraveling that "I still have the angry letter Ralph Nader sent me when I criticized his attacks on globalization.")

On a lighter note, in 1978, Krugman wrote The Theory of Interstellar Trade, a tongue-in-cheek essay on computing interest rates on goods in transit near the speed of light. He says he wrote it to cheer himself up when he was 'an oppressed assistant professor'.[18]

[edit] Economic geography

If trade is largely shaped by economies of scale, as Krugman's trade theory argues, then those economic regions with most production will be more profitable and will therefore attract even more production. That is, Krugman's trade theory implies that instead of spreading out evenly around the world, production will tend to concentrate in a few countries, regions, or cities, which will become densely populated but also have higher levels of income.[19] This forms the basis of Krugman's theory of economic geography, which he began to develop in a 1991 paper in the Journal of Political Economy.[20]

[edit] International finance

Besides his work on international trade, Krugman has also been influential in the field of international finance economics. In 1979 he published a model of currency crises in the Journal of Money, Credit, and Banking showing that fixed exchange rate regimes are unlikely to end smoothly: instead, they end in a sudden speculative attack. Krugman's paper is considered one of the main contributions to the 'first generation' of currency crisis models.[21]

Krugman predicted problems with the fixed exchange rates in East and Southeast Asia, and Thailand's economic policies before the 1997 East Asian financial crisis, and also criticized investors such as Long-Term Capital Management whose profits depended on the maintenance of fixed exchange rates prior to the 1998 Russian financial crisis.[citation needed]Japan's economic depression in the 1990s, arguing that the country was mired in a Keynesian liquidity trap.[22] He also advocated aggressive fiscal policy to counter

[edit] Income distribution

In the 1990s, Krugman increasingly focused on writing books for a general audience on issues he considered important for public policy. In The Age of Diminished Expectations and The Conscience of a Liberal, he especially wrote about the increasing US income inequality in the "New Economy" of the 1990s. He attributes the rise in income inequality partly to changes in technology, but mostly to a change in political atmosphere which has been widely manipulated by Movement Conservatives, as Krugman refers to Neo-Conservative Republicans.

[edit] Other contributions

In the early 1990s, he helped popularize the argument made by Laurence Lau and Alwyn Young, among others, that the growth of economies in East Asia was not the result of new and original economic models, but rather increased capital and labor inputs, which did not result in an increase in total factor productivity. His prediction was that future economic growth in East Asia would slow as it became more difficult to generate economic growth from increasing inputs.[23]

[edit] Author and journalist

Krugman wrote first for Fortune and Slate, later for The Harvard Business Review, Foreign Policy, The Economist, Harper's, and Washington Monthly. Krugman said that to answer what he called Pop Internationalism, "I would have to write essays for non-economists that were clear, effective, and entertaining."[24]

Since January 2000, Krugman has contributed a twice-weekly column to the Op-Ed page of the New York Times, which has made him, in the words of the Washington Monthly, "the most important political columnist in America... he is almost alone in analyzing the most important story in politics in recent years — the seamless melding of corporate, class, and political party interests at which the Bush administration excels."[25] In 2007, he began supplementing his Times column with a blog. In introducing it, he wrote, "Many of the posts will be supplements to my regular columns; I'll be using this space to present the kind of information I can't provide on the printed page – especially charts and tables, which are crucial to the way I think about most of the issues I write about."[26][27]

In September, 2003, Krugman published a collection of his columns under the title, The Great Unraveling. Taken as a whole, it was a scathing attack on the Bush's administration's economic and foreign policies. His main argument was that the large deficits generated by the Bush administration—generated by decreasing taxes, increasing public spending, and fighting a war in Iraq — were in the long run unsustainable, and would eventually generate a major economic crisis. The book was a best-seller.[28][29][30]

In 2007, Krugman published The Conscience of a Liberal. The book is a history of wealth and income gaps in the US in the 20th century. The book documents that the gap between rich and poor declined greatly in mid-century, then widened in the last two decades to levels higher than those in the 1920s. Most economists (including Krugman) have regarded the late-20th century divergence as resulting largely from changes in technology and trade, but Krugman writes that government policies had played a much greater role both in reducing the gap in the 1930s through 1970s and in widening it in the 1980s through the present. He rebuked the Bush administration for policies that currently widen the gap between the rich and poor. Krugman proposed a "new New Deal", which included placing more emphasis on social and medical programs and less on national defense.[31] The book was praised in The New York Review of Books. [32]

[edit] Subprime mortgage crisis

In 2008, amid the subprime mortgage crisis in the US, Krugman predicted that housing prices would drop 25% overall and up to 50% in locations such as Miami or Los Angeles.[33]MSNBC, particularly since the onset of the economic crisis in September 2008. He has repeatedly expressed his view that Alan Greenspan and Phil Gramm are the two people most responsible for causing the crisis.[34] As early as 2005 Krugman was critical of Greenspan's reluctance to regulate the mortgage and related financial markets, and his shifting positions on the impending housing bubble.[35] Krugman has appeared several times as a guest on

[edit] Political views

Krugman is a self-described liberal. His choice of the book title "The Conscience of a Liberal" is a play on Barry Goldwater's "Conscience of a Conservative". Krugman has explained that he views the term "liberal" in the American context to mean "more or less what social democratic means in Europe".[36] He was an ardent critic of the George W. Bush administration and its foreign and domestic policy.

Krugman has sometimes advocated free markets in contexts where the American leftrent control,[37] and that "sweatshops" are an inevitable reality.[17] He has likened the opposition against free trade to the opposition against evolution via natural selection.[38] Unlike many economic pundits, he is regarded as an important scholarly contributor by his peers.[39][40] He has written over 200 scholarly papers and 20 books—both academic and non-academic.[41] condemns them, by writing against

Krugman has written in opposition to increasing farm subsidies,[42] ethanol mandates and subsidies/tax breaks,[43] manned NASA space flights,[44] and has written against some aspects of European labor market regulation.[45][46]

He has, however, declared himself an ardent supporter of the welfare state. His appointment in the Reagan Administration, he has reiterated in an autobiographical essay, was not expected or fitting. "It was, in a way, strange for me to be part of the Reagan Administration. I was then and still am an unabashed defender of the welfare state, which I regard as the most decent social arrangement yet devised." [47]

[edit] Criticism

Throughout his career as a columnist, Krugman has been highly critical of what he regards as dubious economic ideas, such as: strategic trade and its main exponents, Robert Reich, whom he called "offensive" and Lester Thurow whom he called "silly,": protectionism, with attacks on Pat Buchanan on the Right and Ralph Nader on the Left; a return to the gold standard as promoted by editorial writers in the Wall Street Journal; and especially supply-side economics, which he described as economic "snake oil" in Peddling Prosperity. He has frequently been criticized in turn by exponents of these ideas; the journalist James Fallows spoke of his "gratuitous spleen," and Clinton commerce secretary Jeffrey Garten complained that "He behaves like someone with a massive chip on his shoulder."[48]

A November 13, 2003 article in The Economist [49] reads: "A glance through his past columns reveals a growing tendency to attribute all the world's ills to George Bush…Even his economics is sometimes stretched…Overall, the effect is to give lay readers the illusion that Mr Krugman's perfectly respectable personal political beliefs can somehow be derived empirically from economic theory."

Krugman's critics have accused him of employing what they called a "shrill" rhetorical style.[25][50][51]

Economist Daniel B. Klein published during 2008 a paper in Econ Journal Watch (of which he is the chief editor) that reviews and criticizes Krugman's columns for the New York Times. Klein contends that Krugman's "social-democratic impetus sometimes trumps people's interests, notably poor people's interests... Krugman has almost never come out against extant government interventions, even ones that expert economists seem to agree are bad, and especially so for the poor." Klein lists these examples of government interventions that Krugman's columns have opposed: "rent control; US agricultural subsidies; international trade; [...] ethanol mandates and subsidies/tax breaks; NASA manned-space flight; European labor-market restrictions; and the Terry Schiavo case."[52]

Neo-classical economist Robert Barro has criticized Krugman's work frequently and Krugman has referred to him as "boneheaded".[53][54] A blog article by Krugman stating that the argument that temporary protectionism "needs to be taken seriously" due to the 2008-2009 world economic recession drew strong criticism from Barro, who accused Krugman of hypocrisy.[53]

Another frequent critic of Krugman's arguments is Donald Luskin. Krugman has alleged that Luskin has personally stalked him, which Luskin disputes.

[edit] Enron

Krugman was one of many economists to serve as a consultant for an advisory board for Enron; he did this in 1999, being paid $37,500[55] before New York Times rules required him to resign when he accepted an offer to be an op-ed columnist in the fall of 1999. He stated later the consulting was to offer "Enron executives briefings on economic and political issues," and that it had required him to "spend four days in Houston."[55]

When the story of Enron's corporate scandals broke, critics[who?] accused him of having a conflict of interest and the job of having been a bribe to control media coverage, charges he denies forcefully, referring to it as "a game of gotcha" and "tabloid journalism." He states that the payment from Enron did not "cause me to write anything I would not have written otherwise." For one thing, he says, he was not a journalist at the time: "when Enron approached me there was no hint that a Times connection lay in my future. As soon as I shook hands with the Times, I resigned from that board." Further, his "normal fee for a one-hour business speech in Boston or New York was $20,000 - more if the speech involved long-distance travel. The Enron board required that I spend 4 days in Houston"; thus the sum involved was not large, in his view. He says that in columns written before and after the scandal, he disclosed his past Enron relationship when he wrote about the company.[55][56]New York Times on December 10, 2000 called "California Screaming"); Enron was the largest in this market - "I have been criticizing Enron since January 2001, long before everyone else started bashing the company."[57] He was critical of the company: he was one of the first writers to argue that deregulation of the California energy market had led to market-manipulation by energy companies (in a column in the

He writes in The Great Unraveling that:

I was no more perceptive than anyone else; during the bull market years [of the late 1990s] some people did send me letters claiming that major corporations were cooking their books, but - to my great regret - I ignored them. However, when Enron - the most celebrated company of its time, lauded as the very model of a modern business enterprise - blew up, I immediately saw the implications: if such a famous and celebrated company could have been a Ponzi scheme, it was very unlikely that the rest of U.S. business was squeaky clean. In fact, it quickly became clear, the bubble years were both the cause and effect of an epidemic of corporate malfeasance. (p. 26)

[edit] Awards

[edit] Published work

[edit] Academic books (authored or coauthored)

  • The Spatial Economy - Cities, Regions and International Trade (July 1999), with Masahisa Fujita and Anthony Venables. MIT Press, ISBN 0262062046
  • The Self Organizing Economy (February 1996), ISBN 1557866988
  • EMU and the Regions (December 1995), with Guillermo de la Dehesa. ISBN 1567080383
  • Development, Geography, and Economic Theory (Ohlin Lectures) (September 1995), ISBN 0262112035
  • Foreign Direct Investment in the United States (3rd Edition) (February 1995), with Edward M. Graham. ISBN 0881322040
  • World Savings Shortage (September 1994), ISBN 0881321613
  • What Do We Need to Know About the International Monetary System? (Essays in International Finance, No 190 July 1993) ISBN 0881650978
  • Currencies and Crises (June 1992), ISBN 0262111659
  • Geography and Trade (Gaston Eyskens Lecture Series) (August 1991), ISBN 0262111594
  • The Risks Facing the World Economy (July 1991), with Guillermo de la Dehesa and Charles Taylor. ISBN 1567080731
  • Has the Adjustment Process Worked? (Policy Analyses in International Economics, 34)ISBN 0881321168 (June 1991),
  • Rethinking International Trade (April 1990), ISBN 0262111489
  • Trade Policy and Market Structure (March 1989), with Elhanan Helpman. ISBN 0262081822
  • Exchange-Rate Instability (Lionel Robbins Lectures) (November 1988), ISBN 0262111403
  • Adjustment in the World Economy (August 1987) ISBN 1567080235
  • Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy (May 1985), with Elhanan Helpman. ISBN 0262081504

[edit] Academic books (edited or coedited)

  • Currency Crises (National Bureau of Economic Research Conference Report)ISBN 0226454622 (September 2000),
  • Trade with Japan : Has the Door Opened Wider? (National Bureau of Economic Research Project Report) (March 1995), ISBN 0226454592
  • Empirical Studies of Strategic Trade Policy (National Bureau of Economic Research Project Report) (April, 1994), co-edited with Alasdair Smith. ISBN 0226454606
  • Exchange Rate Targets and Currency Bands (October 1991), co-edited with Marcus Miller. ISBN 0521415330
  • Strategic Trade Policy and the New International Economics (January 1986), ISBN 0262111128

[edit] Economics textbooks

[edit] Books for a general audience

  • The Return of Depression Economics and the Crisis of 2008 (December 2008) ISBN 0393071014
  • The Conscience of a Liberal (October 2007) ISBN 0393060691
  • The Great Unraveling: Losing Our Way in the New Century (September 2003) ISBN 0393058506
    • A book of his New York Times columns, many deal with the economic policies of the Bush administration or the economy in general.
  • Fuzzy Math: The Essential Guide to the Bush Tax Plan (May 4, 2001) ISBN 0393050629
  • The Return of Depression Economics (May 1999) ISBN 039304839X
    • Considers the long economic stagnation of Japan through the 1990s, the Asian financial crisis, and problems in Latin America.
    • The Return of Depression Economics and the Crisis of 2008 (December 2008) ISBN 0393071014
  • The Accidental Theorist and Other Dispatches from the Dismal Science (May 1998) ISBN 0393046389
    • Essay collection, primarily from Krugman's writing for Slate.
  • Pop Internationalism (March 1996) ISBN 0262112108
    • Essay collection, covering largely the same ground as Peddling Prosperity.
  • Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations (April 1995) ISBN 0393312925
    • History of economic thought from the first rumblings of revolt against Keynesian economics to the present, for the layman.
  • The Age of Diminished Expectations: U.S. Economic Policy in the 1990s (1990) ISBN 026211156X
    • A "briefing book" on the major policy issues around the economy.
    • Revised and Updated, January 1994, ISBN 0262610922
    • Third Edition, August 1997, ISBN 0262112248

[edit] Selected academic articles

  • (1996) 'Are currency crises self-fulfilling?' NBER Macroeconomics Annual 11, pp. 345-78.
  • (1991) 'Increasing returns and economic geography'. Journal of Political Economy 99, pp. 483-99.
  • (1991) 'Target zones and exchange rate dynamics'. Quarterly Journal of Economics 106 (3), pp. 669-82.
  • (1991) 'History versus expectations'. Quarterly Journal of Economics 106 (2), pp. 651-67.
  • (1981) 'Intra-industry specialization and the gains from trade'. Journal of Political Economy 89, pp. 959-73.
  • (1980) 'Scale economies, product differentiation, and the pattern of trade'. American Economic Review 70, pp. 950-59.
  • (1979) 'A model of balance-of-payments crises'. Journal of Money, Credit, and Banking 11, pp. 311-25.
  • (1979) 'Increasing returns, monopolistic competition, and international trade'. Journal of International Economics 9, pp. 469-79.

[edit] References

  1. ^ See inogolo:pronunciation of Paul Krugman.
  2. ^ Foreign Policy: Top 100 Public Intellectuals. May 2008. Accessed 10-13-08. Krugman ranks in their top 100 list.
  3. ^ Krugman Wins Nobel for economics, BBC News, 10-13-08, accessed 10-15-08.
  4. ^ Economics 2008, Nobelprize.org, accessed 10-15-08.
  5. ^ Paul Krugman, "Your questions answered", blog, January 10, 2003, retrieved December 19, 2007
  6. ^ Paul Krugman, "About my son", New York Times blog, December 19, 2007
  7. ^ Interview, U.S. Economist Krugman Wins Nobel Prize in Economics "PBS, Jim Lehrer News Hour", October 13, 2008, transcript retrieved October 14, 2008
  8. ^ a b Hirsh, Michael (4 March 1996). "A Nobel-Bound Economist Punctures the C[onventional] W[isdom]--and Not a Few Big-Name Washington Egos". Newsweek.
  9. ^ "2008 January - Paul Krugman - Op-Ed Columnist - New York Times Blog". Krugman.blogs.nytimes.com. http://krugman.blogs.nytimes.com/2008/01/30/. Retrieved on 2008-10-13.
  10. ^ Catherine Rampell (October 13, 2008). "Paul Krugman Wins Economics Nobel - Economix Blog - NYTimes.com". Economix.blogs.nytimes.com. http://economix.blogs.nytimes.com/2008/10/13/paul-krugman-wins-economics-nobel/?em. Retrieved on 2008-10-13.
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  12. ^ "Microsoft Word - sciback_cover_ek_2008_FINAL.doc" (PDF). http://nobelprize.org/nobel_prizes/economics/laureates/2008/ecoadv08.pdf. Retrieved on 2008-10-13.
  13. ^ "Top 5% Authors, as of September 2008". Research Papers in Economics. 2008-09. http://ideas.repec.org/top/top.person.all.html. Retrieved on 2008-10-13.
  14. ^ Note: Krugman modeled a 'preference for diversity' by assuming a CES utility function like that in A. Dixit and J. Stiglitz (1977), 'Monopolistic competition and optimal product diversity', American Economic Review 67.
  15. ^ P. Krugman (1981), 'Trade, accumulation, and uneven development', Journal of Development Economics 8, pp. 149-61.
  16. ^ 'Bold strokes: a strong economic stylist wins the Nobel', The Economist, Oct. 16, 2008.
  17. ^ a b In Praise of Cheap Labor by Paul Krugman, Slate, March 21, 1997
  18. ^ Economics: the final frontier
  19. ^ Nobel Prize Committee 'Information for the Public', page 3.
  20. ^ 'Honoring Paul Krugman' EconomixNew York Times, by Edward Glaeser, Oct. 13, 2008. blog of the
  21. ^ Craig Burnside, Martin Eichenbaum, and Sergio Rebelo (2008), 'Currency crisis models', New Palgrave Dictionary of Economics, 2nd ed.
  22. ^ Paul Krugman's Japan page
  23. ^ Krugman, Paul (December 1994). "The Myth of Asia's Miracle". Foreign Affairs (www.foreignaffairs.org). http://www.foreignaffairs.org/19941101faessay5151/paul-krugman/the-myth-of-asia-s-miracle.html. Retrieved on 2008-12-26.
  24. ^ (Krugman 1996a, Introduction)
  25. ^ a b Confessore, Nicholas (December 2002). "Comparative Advantage". Washington Monthly. http://www.washingtonmonthly.com/features/2001/0212.confessore.html. Retrieved on 2007-02-05.
  26. ^ Krugman, Paul (September 18, 2007). "Introducing This Blog". The New York Times. http://krugman.blogs.nytimes.com/2007/09/18/introducing-this-blog/. Retrieved on 2007-09-19.
  27. ^ Washington Monthly profile from December 2002
  28. ^ ""The Great Unraveling: Losing Our Way in the New Century"". Powell's Books. http://www.powells.com/biblio/61-0393326055-0. Retrieved on 2007-11-22.
  29. ^ a b The Economist - The one-handed economist Paul Krugman and the controversial art of popularising economics, November 13, 2003
  30. ^ Krugman, Paul. "The Great Wealth Transfer." Rolling Stone. November 30, 2006
  31. ^ Oct 17 2007- Krugman On Healthcare, Tax Cuts, Social Security, the Mortgage Crisis and Alan Greenspan, in response to Alan Greenspan's Sept 24 appearance with Naomi Klein on Democracy Now!
  32. ^ November 22, 2007- Tomansky, Michael The Partisan
  33. ^ "How bad is the mortgage crisis going to get?". http://money.cnn.com/2008/03/14/news/economy/krugman_subprime.fortune/?postversion=2008031705. Retrieved on 2008-03-17.
  34. ^ http://www.youtube.com/watch?v=YwqcLbZJ4HA
  35. ^ Krugman, Paul (2005-8-29). "Greenspan and the Bubble". New York Times (New York Times). http://www.nytimes.com/2005/08/29/opinion/29krugman.html. Retrieved on 2008-12-07.
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  37. ^ Reckonings; A Rent Affair, by Paul Krugman, The New York Times, June 7, 2000
  38. ^ Ricardo's difficult idea
  39. ^ a b Avinash Dixit, The Journal of Economic Perspectives, Vol. 7, No. 2 (Spring, 1993), pp. 173-188, In Honor of Paul Krugman: Winner of the John Bates Clark Medal, Retrieved March 28, 2007.
  40. ^ a b Paul Krugman, 2004. Retrieved March 28, 2007.
  41. ^ The New York Times, "Columnist Biography: Paul Krugman". Retrieved April 15, 2007.
  42. ^ True Blue Americans, by Paul Krugman, The New York Times, May 7, 2002
  43. ^ Driving Under the Influence, by Paul Krugman, The New York Times, June 25, 2000
  44. ^ A Failed Mission, by Paul Krugman, The New York Times, February 4, 2003
  45. ^ Reckonings; Pursuing Happiness, by Paul Krugman, The New York Times, March 29, 2000
  46. ^ Reckonings; Blessed Are the Weak, by Paul Krugman, The New York Times, May 3, 2000
  47. ^ Incidents From My Career, by Paul Krugman, Princeton University Press, Retrieved 10 December 2008
  48. ^ "Newsweek, The Great Debunker: A Nobel-bound Economist Punctures the CW - and Not a Few Big-Name Washington Egos". http://www.j-bradford-delong.net/Economists/paulkrugman.html.
  49. ^ The Economist, Face Value: Paul Krugman, one-handed economist
  50. ^ Peter Ferrara, National Review, The Hysterical Opposition, August 22, 2001. Retrieved March 28, 2007.
  51. ^ Jack Shafer, Slate, Raines-ing in Andrew Sullivan
  52. ^ Daniel B. Klein with Harika Anna Bartlett, "Left Out: A Critique of Paul Krugman Based on a Comprehensive Account of His New York Times Columns, 1997 through 2006", Econ Journal Watch 5:1, 109-133.
  53. ^ a b Dismal science, revisited. By Clive Cook. The Atlantic. Published 10 February 2009.
  54. ^ War and non-remembrance. By Paul Krugman. The New York Times. Published January 22, 2009.
  55. ^ a b c Paul Krugman, "My Connection With Enron, One More Time", Retrieved March 28, 2007.
  56. ^ Paul Krugman, "Me and Enron". Retrieved March 28, 2007.
  57. ^ http://www.pkarchive.org/personal/EnronFAQ.html ref name="EnronFAQ">Paul Krugman, "My Connection With Enron, One More Time", Retrieved October 27, 2008.
  58. ^ Mother Jones: Paul Krugman., August 7, 2005. Retrieved March 28, 2007.
  59. ^ "Nobel Prize in Economics". Swedish Academy. http://nobelprize.org/nobel_prizes/economics/laureates/2008/. Retrieved on 2008-10-13.

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Persondata
NAME Krugman, Paul
ALTERNATIVE NAMES Krugman, Paul Robin
SHORT DESCRIPTION American economist, columnist, author and Nobel Laureate
DATE OF BIRTH February 28, 1953
PLACE OF BIRTH
DATE OF DEATH
PLACE OF DEATH