Paul Krugman: 'Economy Desperately Needs A Short-Run Fix'

New York Times:

For what we’re seeing now is what happens when influential people exploit a crisis rather than try to solve it.

Read the whole story: New York Times

Comments

[TeraWatt60]

10:53 AM on 08/15/2011

The problem with the economy is not too little capacity or too little capital the problem is too little demand. Demand is generated by spending in the aggregate (consumers, government, and business) with consumers accounting for ~70%.  When the Republican bubble machine burst in 2007 consumer demand went way down. Unemployment increased dramatically lowering federal and state revenues and causing deficits to rise. Business also cut back as there are no longer customers to warrant expansion despite record profits by corporate entities.

Teapublicans view the deficit as a cause of the problem when in fact it is the only source of demand currently in the economy. We have been withdrawing money with every state budget that cuts spending, every time the Federal government cuts as well.

In fact, if the Teapublican mo.rons had their way and we had defaulted on our debt the economy would have contracted by 10% in one month!! Whereas under the Bush Error it took several months to contract 9%

The Teapublicans have done and advocated for NOTHING that would help put demand into the economy currently and are desperate not to because they think anything that helps the economy helps Obama politically. They are not even really serious about deficit reduction because the first items on the chopping block are programs like Social Security (not part of the deficit) and Medicare (also not part of deficit for ~10 years) and Medicaid (which the Middle Class rely on for Nursing Home care )  along with education , environmental protection , worker and even food safety!)  but refusing to require those already sitting on tonnes of cash to pay anything extra !  Instead they just spout silly platitudes and talk about "long term" when the economy is dying now because of the failed policies of the Teapublican philosophy

[TomDi]

02:03 PM on 08/15/2011

Here is the idea of the so-called leftist Paul Krugman:

Paul Krugman Calls for Space Aliens to Attack Earth Requiring Massive Defense Buildup to Stimulate Economy

Read more: http://newsbusters.org/blogs/noel-sheppard/2011/08/14/paul-krugman-calls-space-aliens-attack-earth-requiring-massive-defens#ixzz1V7cMTphl

[Trustfunded1]

08:57 AM on 08/15/2011

Paul's crazy train has officially go off the rails with his fake Space Alien Invasion idea announced on CNN.

Desperate people will do anything before they admit their policies were wrong sometimes.
Even if it makes them look absolutely crazy on national TV.

[TomDi]

02:04 PM on 08/15/2011

You can read it here for yourself. He really did say it.

Paul Krugman Calls for Space Aliens to Attack Earth Requiring Massive Defense Buildup to Stimulate Economy

Read more: http://newsbusters.org/blogs/noel-sheppard/2011/08/14/paul-krugman-calls-space-aliens-attack-earth-requiring-massive-defens#ixzz1V7cMTphl

[MayorsRevenge]

08:16 AM on 08/15/2011

Do you all have any idea how many stimuli we have tried to date?!

Anyone remember the very first one back in 08? The $300 consumer stimulus checks!

Then the TARP, TALF, unlimited GSE bailout on Christmas Eve, maiden lane, c4c, housing credit, Obama mega stimulus, payroll tax deduction, appliance rebate, etc etc etc

Once more unto the breach dear friends!

[abhorson]

06:10 AM on 08/15/2011

Mostly junk ... EVEN if I could reasonably entertain the idea that some "stimulus" is necessary, "rebuilding roads, schools and water systems" don't rank 1/2 or 40 on the list.

Roads can be handled with reg budgets - where are those roads that kee areas from pursuing business development?

Schools that need 'rebuilding' are worth re'building ONLY if the students coming out can produce more. Otherwise, a shinny new swimming pool, or new administrative facilities don't actually produce anything in a new economy. Let them be rebuilt from regular budgets too!

Water systems - extending water delivery to areas is a good idea -- IF there is a requirement to build something new OR develop new infrastructure for business. Otherwise handle it like roads and schools from reg budgets.

Come up with investments that PRODUCE something for the future. Invest in new energy production (any kind that's efficient), invest in reducing dependence on foreign oil by using what USA has (production, refining etc..), invest in biochemical research in universities cause there's the future !!

Suspend payroll taxes for 2 years for new hires IF they received unemployment or offer tax breaks to every corporation that grows payroll during this period. And lots more stuff....

But stop "investing" in nothing ... in fact these "projects" just end up going to companies that have "friends" in politics (city hall, board of supervisors etc..) and produce NOTHING except a loss to the taxpayers.

[LazyRepubs]

08:55 AM on 08/15/2011

You really think Krugman is telling us we should invest in projects that are wasteful? Come on!! You can invest in schools by making them more energy efficient; you can invest in road construction that prevents traffic delays and congestion, thereby saving money. Right now many water mains break, costing millions in damage, when a cheaper fix was possible but not done because the money was not there. We have to find a way to get politicians from wasting taxpayer money but that can be done. But Krugman is right and if the USA cannot enact basic sound economic policies because of our corrupt political system, we need to fix that, and fix that fast.

[abhorson]

09:17 AM on 08/15/2011

I have seen roads dug-up and water pipes replaced. A year later dug-up again and new fiber put in. A year later sidewalks were redone. Same company - owner friends with mayor and some on city council.

I have seen schools get energy efficient windows - rated at -20F in a town where the temp never drops sub 45F in the winter - @3x price I would pay at HomeDepot.

I have seen newspapers run stories which highlight horrible problems in a district - backed with attorneys threatening action. I have then seen companies known to be associated with folks on board of supervisors buy ADD space in that newspaper (cause they couldn't give political donations). I have then "heard" of new kitchens, windows, garage doors and pools built for those supervisors.

I would have to be Paul Krugman to think we can fix that and fix that fast !!!

[beerbagger]

03:52 AM on 08/15/2011

US politicians first need to wake up and stop giving this country a full blown anxiety and identity crisis. They need to stand up on political-will and not political stumps. It is fraud and their bad policies that have landed us squarely in the middle of this greedy tempest. Deficits didn't matter according to Cheney... now they take priority to unemployment. The talent show DC put on during the debt debacle made everything worse and now the US is downgraded... they could have been pragmatic and just voted for the increase early on with stipulations to Super Congress later... Banks and Big Capitalism got greedy, now they are sitting on more cash than ever. They don't need credit and don't need workers... if they need some warm bodies, policy allows them to hire cheaply overseas. Policy allows them to keep money offshore and run through tax loopholes... The rumor that business doesn't hire because the future policies are so uncertain... when did businesses become whiny pre-pubescent kids who think they deserve to get their way in spite of what's good for the country as a whole? Turning off social services and protection agencies... instead of going through them with a fine tooth comb to find the fraud. Bad policies and no political-will is destroying the US economy... nothing more nothing less.

[Chase Price]

01:41 AM on 08/15/2011

Until Obama starts voicing this basic argument of Krugman's he is going to continue letting the GOP dictate the terms of the debate. Obama needs to stop messing around and start speaking the truth.

[LazyRepubs]

09:05 AM on 08/15/2011

Obama is a big disappointment. When 85 percent of the US population owns only 15 percent of the wealth, the other 15 percent who own the remaining 85 percent have the power. Congress passes laws and supports programs that benefit that 15 percent. Why? Because those 15 percent benefit Congress more. Any person elected to the US Congress greatly enhances their material wealth and they are bought and paid for by that 15 percent. You need a President who can fight against that corruption and wealth disparity. But Obama is not the one to do it. Passing laws that are fair is called "socialism", bailing out the banks but not helping the homeowner is called "socialism", and putting a heavier tax burden on the 85 percent with their small 15 percent of the wealth is called good economics. Obama has joined the democratic/republican political machine that does not represent the majority of Americans.

[Box500]

09:45 PM on 08/14/2011

Prepare for the massive crash sometime 2012-2014. The one we put off in 2008 by printing money and not fixing the structural problems with the banking industry, and not repairing our manufacturing base and trade policy. Then the right wing will attempt to fully implement their shock doctrine. Hold on to your hats.

[smurrayesq]

09:07 PM on 08/14/2011

If low taxes were the answer, our country would be at zero percent unemployment. Our taxes are lower than they have been since the 1950's. I wish that Paul Krugman would camp out in front of the White House until someone would listen to him. The original stimulas package was not enough, and a significant portion of it was tax cuts. When the rich get tax cuts, they keep the money, it doesn't trickle down. They could do an entire season of "Hoarders" based simply upon the wealthy and corporations failing to reinvest their money into the economy. They are simply stockpiling the profits. The money has never "trickled down" and it won't "trickle down" this time either. Obama's ratings are low because people like me, who supported his campaign, are upset that he doesn't seem to fight for anything. I'll vote for him, because the Republican ideology won't help anyone but the rich, and I'm not in that league. It is delusional to think that supporting Repbulicans will lift the middle class or poor into that league. If I were polled, I'd say I was dissatisfied with Obama, but like I said, I will vote for him. I just won't give him money. I simply cannot understand how he became the only black guy in Washington DC that no one is afraid of.

[nogimmicks]

07:47 PM on 08/14/2011

Same song third verse (WS bailout, stimulus, qe1,qe2,..), - may be something is wrong with the advise?

[Hugebrass]

07:13 PM on 08/14/2011

As a small business owner, I read Krugman and just laugh. He's just a professor with a chalkboard and a crayon.

But, speaking of laughing, if ever a couple of Keynesians needed to have their crayons taken away, this video shows who needs to be taken seriously. And it ain't Krugman.

http://www.breitbart.tv/paul-krugman-reccomends-military-build-up-to-fight-alien-invasion-as-remedy-for-economy/

[Tom95134]

03:51 PM on 08/14/2011

The economy already has a short-run "FIX". It's called the no taxes high of the Republicans and their Tea Party masters. It's just like shooting high grade heron into the veins of the low information voter. The more they get, the more they want. At the same time, they want those services they have become accustomed to. It makes no sense but it is reality.

Now there is a word... REALITY. Something the Republicans and their Tea Party masters have no concept of.

[Hugebrass]

07:15 PM on 08/14/2011

The "raise taxes on the rich" argument is so lame - and so easily defeated. So, for the umpteenth time here on HP, I again ask:

If you raise the tax rate on those making over $250,000/y­ear to the Clinton era levels, you'll raise an additional $70 Billion each year. That's 1/20th of the deficit. If you roll back ALL of the Bush tax rates, you raise $340 Billion/ye­ar. So, obviously, raising taxes will accomplish very little, and this does not consider the behavioral effect on investment and job creation.

Therefore, "Where will you find the additional revenue necessary to eliminate the deficit and return our nation to fiscal sanity?

[meemee]

08:41 PM on 08/14/2011

Something is better than Nothing

[Teresa Young]

03:10 PM on 08/14/2011

It's a bit to ate for a short run fix, and it will never happen until selfishness and greed are a thing of the past; anyone want to hold their breath for that one?

[MayorsRevenge]

01:52 PM on 08/14/2011

I'm sure if we all go buy Chinese made toaster ovens on credit everything will turn out juuuuuuust fine.

[wsdave]

11:14 PM on 08/13/2011

"Economy Desperatel­y Needs A Short-Run Fix"

And what do you propose, since government spending won't do it?

I'm sure you're a smart guy and all, but NO economist has ever been able to come up with an answer other than making war on wealthy countries, winning, and plundering them.

[Peter007]

12:12 PM on 08/14/2011

Economic activity would increase if overhead or fixed costs were to drop.
Overhead or fixed costs cut into profits and keep growth from occurring.
The government has in its power the ability to cut all fixed costs by 35%. Cutting the fixed cost will create an employment boom and a jump in GDP.

[MayorsRevenge]

02:10 PM on 08/14/2011

Don't tell Bernanke!

[enviro1]

09:39 PM on 08/13/2011

Obama will fix it all...hope and change!!!!!!!!!!

LMAO>!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!