12/02/2006

John Kerry and Paul Krugman

This post on the The Economist blog very succinctly points out how the left leaning pundits are colored by their ideology. Very funny and it hits the mark very well.

IT IS an interesting exercise to imagine an alternative universe in which John Kerry had been elected in 2004, and then imagine Paul Krugman's latest column in that universe:

Between mid-2003 and mid-2006, economic growth in the United States was fueled mainly by a huge housing boom, which created jobs directly and made it easy for consumers to spend freely by borrowing against their rising home equity.

That housing boom has now gone bust. But the optimists and pessimists disagree both about how bad the bust will get and about how much damage the housing slump will do to the economy as a whole.

The optimists include Alan Greenspan, whom some accuse of letting the housing bubble get out of hand in the first place. On Tuesday, he told investors at a conference that the worst of the housing slump is over, saying that “it looks as though sales figures have stabilized.”

But the very next day the government released grim data on new home sales for October, and revised its estimates for earlier months downward. Most, though not all, of the other economic numbers that came out this week were also substantially weaker than expected.
. . . Since last summer, when the housing bust became unmistakable, interest rates on long-term bonds have fallen sharply. They’re now yielding much less than short-term bonds. The fact that investors are willing to buy those long-term bonds anyway tells us that these investors expect interest rates to fall. And that will happen only if the economy weakens, forcing the Federal Reserve to cut rates. So bond buyers are, in effect, betting on a future economic slowdown.

How serious a slump is the bond market predicting? Pretty serious. Right now, statistical models based on the historical correlation between interest rates and recessions give roughly even odds that we’re about to experience a formal recession. And since even a slowdown that doesn’t formally qualify as a recession can lead to a sharp rise in unemployment, the odds are very good — maybe 2 to 1 — that 2007 will be a very tough year.

Luckily, we’ve got good leadership for the coming economic storm: the White House is occupied by a man who’s ideologically flexible, listens to a wide variety of views, and understands that policy has to be based on careful analysis, not gut instincts. Oh, wait.

If John Kerry had become president, what policy changes would he have made that would have averted this (possibly) looming disaster? Tax increases—even tax increases on the wealthy—are not commonly thought to be helpful at averting recessions. And with long-term interest rates so low that they are below short term interest rates (a phenomenon technically known as an "inverted yield curve") the Rubinomical claims for the economic benefits of deficit reduction are implausible. American markets are awash in capital; indeed, that is the basic complaint of everyone worried about the current account deficit. It seems very unlikely that America's budget deficit, which the Congressional Budget Office now estimates will be 2% of GDP in 2006, is substantially inhibiting the ability of private businesses to raise capital.

Given the constraints upon American governments, the president has very little influence over the economy—and a jolly good thing, too, many would say. At the very best, he might mildly palliate some of the recessionary pain. He certainly can't repeal the business cycle, or prevent either housing booms, or the resulting collapse*. So it's hard to see how another president—even one who was "ideologically flexible, listens to a wide variety of views, and understands that policy has to be based on careful analysis"—would change things.


Read rest of the stuff to understand how Paul Krugman's and other pundits ideology is skewing their economic analysis. The New York Times is another institution which has lost its objectivity due to its hatred of Bush.

6 comments:

walter said...

you typed: "...how the left leaning pundits are colored by their ideology."

do you believe that right-leaning pundits ar not colored by their ideology?

regardless of how much influence a president may have over a national and world economy at any moment in tmie, do you believe that Bush is a man who’s ideologically flexible, listens to a wide variety of views, and understands that policy has to be based on careful analysis, not gut instincts?

just curious... you seem to hate leftists, paul krugman, bears and permabears as much as the NYT hates bush...

my comments here, that account for like 99% of the comments on this blog, inspire some good posts by you...

Pradeep Bonde said...

The media is owned and operated by lefty loonies. They have a monopoly on it worldwide. They set the agenda in all debates. The issue is not about Bush, issue is objectivity in reporting or analysis. Even Krugman's colleagues say he has lost his mind.

As to perma bears, I am just pointing out the flaw in their logic. The popular blogs are all dominated by bears. So I think like the leftist media, there is a complete domination by bearish blogger in blogs.

Just see the Tickersense influnetial blog list and look at their last one year bearish to bullish post ratios. Some of them have been consistantly predicting a black Monday on every Friday. If they do that for 52 week, some day, they will be rigt.

If people want to listen to them, who am I to object.

walter said...

although its topic for another blog perhaps, but i disagree that "the media is owned and operated by lefty loonies." that view is way to simplistic... yes, many individual journalists may be left leaning, liberal, progressrive, and/or non-republican in their views, but editors, editorial boards, managers and corporate ownership of media (there are like 4 or 5 corporations that control all of the western main stream media) are more beholden to the interests of big money, corporate sponsors, transnational corporations, etc. now, many people who consider themselves rational and reasonable just dismiss this idea as conspiracy theory, but it is any more radical than just declaring that "The media is owned and operated by lefty loonies?" nothing is that simple - reducing something complex like media ownership and control is one way that real debate never happens between members of the US electorate.

i see lots of perma bearishness out there, but i also see lots of bullishness despite bad economic news. no bear pundit denies that "the market can behave irrationally longer than one can remain solvent."

and sure lots of people called for the market to tumble, but before no one saw the tech crash back in 2001, so who cares.

i doubt these perma bears are going broke now, but who knows, maybe they are...

Pradeep Bonde said...

Because of the walls separating the ownership and editorial, the real ownership does not matter, the agenda is set by the Lefties. Look at Barron's, good times, bad times, economic recession, or economic boom, Alan Abelson is bearish. Now this has been going on for how many years. In the meanwhile other publications and websites for investors have flourished, but Alan Abelson's consistent and permanent bearishness to a large extent determines who gets quoted in Barron's, who gets to write for Barron's.
Barron's is just one example look at the columnist writing for NYT, they have such a warped view barring Thomas L. Friedman, all of them are pouting same theories. Does one need to read another column by Maurin Dowd to understand her pet peeve of being rejected in love by a handsome man.
Look at UK, the leftist leaning media lionised animal rights actvist , because it suited their ideology, now the animal rights moment has become extreme moment in Britain where houses are fire bombed, dead bodies of scientist stolen, and medical research on animal is done in secrecy. The media had a significant role in egging on such behaviour in early stages.
The issue is not just Bush, it is the way leftist/liberal agenda is promoted by media in issues after issues in countries after countries. In most countries journalism is a profession of the leftist leaning extremists.

walter said...

have you ever read:

The Conservative Nanny State

How the Wealthy Use the Government to Stay Rich and Get Richer

by Dean Baker, published May 2006

It's a great analysis on language and how the terms and concepts that are put forth and adopted at outset affect the terms of the debate later on.

I can't comment on barrons, and this sentence doesnt make sense to me: "Because of the walls separating the ownership and editorial, the real ownership does not matter, the agenda is set by the Lefties."

Consider Murdoch and Fox News Network... Talk radio, at least here in the USA is right wing dominated... Wall Street Journal too! Washington Times, New York Post... c'mon there are just as many conservative publications as there are progressive...

as for the ultra right wing christian right in this country, they have political candidates coming forth and saying that gay marriage is the biggest threat to america.

i dont know enough bout maureen dowd's background to comment, but i am sure you wouldnt make some statement about some male pundit and his luck with beautiful women as indicative of what he is writing, or would you?

Pradeep Bonde said...

http://www.amazon.com/Are-Men-Necessary-Sexes-Collide/dp/0399153322
She wrote an entire book about it "Are men necessary". Read it to understand her fixation and why she writes the way she writes about men and women.