Comments on: Krugman: Fed is Running Out of Tricks http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html Sun, 22 Nov 2009 13:16:39 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Inquisitor http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5217 Inquisitor Sun, 16 Mar 2008 01:06:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5217 Great analysis. I wish the Fed would get out of the way and let the market correct itself. History has shown time and time again that intervention of this sort only prolongs recessions and makes things worse. Great analysis. I wish the Fed would get out of the way and let the market correct itself. History has shown time and time again that intervention of this sort only prolongs recessions and makes things worse.

]]> By: S http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5162 S Sat, 15 Mar 2008 02:01:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5162 Doug,<br/><br/>There are clear and present solutions to the crisis, they are just too painful and require sacrifice for more than the sound bite attension spans. THe solution is to retard the system and change the game. You do that by being willing to endure some pain and asking for collective sacrifice. The governement vastly underestimates the resolve of the American people. The nly thing lacking is someone who can articulate why policy has failed, why conventional thinking is flawed and offer a courageous vision of a different path. Not some change slogan, but a demonstrated understanding of the various issues that have tied the United States down in self defeating conventions/rule sets (to borrow a Barnett phrase). The rule set needs to change and devaluing the dollar, while I agree is not the path to prosperity, but it may unfortunelty A path to changing the rule set. <br/><br/>The simple solution is to let the instutions fail in the natural process of creative destruction. There are far too many ibankers, analysts ect. The market works best when left to its own devices. There has been so much mal investment across retail, constuction, finance and other as a direct result of government action that espousing more action is exactly the wrong thing to do. Yves is right, let it fail. And if Lehman goes too so be it. Goldmas is still American and it will have to hire more people to do the work of 3. What is wrong with that?<br/><br/>3 simples steps.<br/>1. get out of the way and let the market work<br/>2. elect someone who understands the complexities inherent in the current market system. <br/>3. galvanize grassroot support to change the rules with an upfront buyin for the short term pain. Inspire the next greatest generation via a neo -reconstruction. Doug,

There are clear and present solutions to the crisis, they are just too painful and require sacrifice for more than the sound bite attension spans. THe solution is to retard the system and change the game. You do that by being willing to endure some pain and asking for collective sacrifice. The governement vastly underestimates the resolve of the American people. The nly thing lacking is someone who can articulate why policy has failed, why conventional thinking is flawed and offer a courageous vision of a different path. Not some change slogan, but a demonstrated understanding of the various issues that have tied the United States down in self defeating conventions/rule sets (to borrow a Barnett phrase). The rule set needs to change and devaluing the dollar, while I agree is not the path to prosperity, but it may unfortunelty A path to changing the rule set.

The simple solution is to let the instutions fail in the natural process of creative destruction. There are far too many ibankers, analysts ect. The market works best when left to its own devices. There has been so much mal investment across retail, constuction, finance and other as a direct result of government action that espousing more action is exactly the wrong thing to do. Yves is right, let it fail. And if Lehman goes too so be it. Goldmas is still American and it will have to hire more people to do the work of 3. What is wrong with that?

3 simples steps.
1. get out of the way and let the market work
2. elect someone who understands the complexities inherent in the current market system.
3. galvanize grassroot support to change the rules with an upfront buyin for the short term pain. Inspire the next greatest generation via a neo -reconstruction.

]]> By: S http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5161 S Sat, 15 Mar 2008 01:52:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5161 max<br/><br/>capital finds ideas if the market is allowed to work. The problem is we haven't been very good at that lately. It is the very system you espouse works that has gotten us here. The system needs an overhaul which requires retarding conventional consensus "principles" that have acted to buoy a foundation that is crumbling as the superstructure is decorated with ever more bells and whistles. As for relying on investment bankers, being an escapee, not the place to be searching for ideas for the most part. I wonder how many people on the Forbes list are i-bankers (pre 2000 and post 2002). be an interesting look. max

capital finds ideas if the market is allowed to work. The problem is we haven’t been very good at that lately. It is the very system you espouse works that has gotten us here. The system needs an overhaul which requires retarding conventional consensus “principles” that have acted to buoy a foundation that is crumbling as the superstructure is decorated with ever more bells and whistles. As for relying on investment bankers, being an escapee, not the place to be searching for ideas for the most part. I wonder how many people on the Forbes list are i-bankers (pre 2000 and post 2002). be an interesting look.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5159 Anonymous Fri, 14 Mar 2008 22:47:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5159 Having read the preceding posts about the "causes" of the current economic problems and the proposed solutions, it is clear to me why Dr. Bernanke and the politicians haven't come up with a solution(s). The problem is too amorphous and there is no simple solution. You can decry the efforts of Bernanke and congress, but none of you have a "good" solution. Just admit it and move along. Most of us will come out the other end of this, poorer because our economy is weaker and we bailed out the institutions we can't live without. I'm 55 years old and I have now seen this happen at least 3 times. Unfortunately, we are running out of reserves with which to bailout the big guys who exploit the system. At my age I'm supposed to be pretty conservative economically, but I am being driven back to my twenty something liberal economic ways. More government oversight, a steeper progressive income tax and unions. Business and the market have brought it on themselves.<br/><br/>Doug Having read the preceding posts about the “causes” of the current economic problems and the proposed solutions, it is clear to me why Dr. Bernanke and the politicians haven’t come up with a solution(s). The problem is too amorphous and there is no simple solution. You can decry the efforts of Bernanke and congress, but none of you have a “good” solution. Just admit it and move along. Most of us will come out the other end of this, poorer because our economy is weaker and we bailed out the institutions we can’t live without. I’m 55 years old and I have now seen this happen at least 3 times. Unfortunately, we are running out of reserves with which to bailout the big guys who exploit the system. At my age I’m supposed to be pretty conservative economically, but I am being driven back to my twenty something liberal economic ways. More government oversight, a steeper progressive income tax and unions. Business and the market have brought it on themselves.

Doug

]]> By: Max http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5155 Max Fri, 14 Mar 2008 21:39:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5155 I would not be so enthusiastic about dollar devaluation. Traditionally, the US thrived on good investment opportunities it offered here, I'm sure Ives, as a former ibanker, can vouch. A deliberate debasement of the dollar will be fatal for the investment climate here, the capital will flee, and the resulting high interest rates will kill the rest of the economy. Also, as any complex economy with a high degree of specialization, we are vastly dependent on affordable imports to do business here. I would not be so enthusiastic about dollar devaluation. Traditionally, the US thrived on good investment opportunities it offered here, I’m sure Ives, as a former ibanker, can vouch. A deliberate debasement of the dollar will be fatal for the investment climate here, the capital will flee, and the resulting high interest rates will kill the rest of the economy. Also, as any complex economy with a high degree of specialization, we are vastly dependent on affordable imports to do business here.

]]> By: S http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5144 S Fri, 14 Mar 2008 17:41:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5144 minkia couldnt agree more. Funny defense worries about china's military buildup, but the once scary China surplus dollars is becoming an albatross rapidly. The dollar decline while painful ought to be pressed by the policy community for exactly the reasons you stipulate. Bush takes every opportunity to tout free trade as he knows well that the halcyon days are over/gone/done. By the way halcyon capital going public (hedge fund) kind of ironic. Reindustrialzation along the german model will work nicely thanks you. And the productivity myth (4 more hours a day for an extra button on the remote) that the goverement loves to tout ought to be added to the dustbin). minkia couldnt agree more. Funny defense worries about china’s military buildup, but the once scary China surplus dollars is becoming an albatross rapidly. The dollar decline while painful ought to be pressed by the policy community for exactly the reasons you stipulate. Bush takes every opportunity to tout free trade as he knows well that the halcyon days are over/gone/done. By the way halcyon capital going public (hedge fund) kind of ironic. Reindustrialzation along the german model will work nicely thanks you. And the productivity myth (4 more hours a day for an extra button on the remote) that the goverement loves to tout ought to be added to the dustbin).

]]> By: kwark http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5143 kwark Fri, 14 Mar 2008 17:09:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5143 Despite Moe's comment above, Bernanke's "solutions" all seem stop-gap at best - designed to keep the shell game going a bit longer in the hope that everything will straighten itself out somehow. Even Krugman seems a bit confused "... But the Fed is trying to contain the damage from the collapse of the housing bubble, keeping it from causing a deep recession or wrecking financial markets that had nothing to do with housing." Nothing to do with housing? The slow-motion disaster caused by all the lies and liquidity sloshing around is evidence that the housing bubble is just one of the excesses of the financial markets. Despite Moe’s comment above, Bernanke’s “solutions” all seem stop-gap at best – designed to keep the shell game going a bit longer in the hope that everything will straighten itself out somehow. Even Krugman seems a bit confused “… But the Fed is trying to contain the damage from the collapse of the housing bubble, keeping it from causing a deep recession or wrecking financial markets that had nothing to do with housing.” Nothing to do with housing? The slow-motion disaster caused by all the lies and liquidity sloshing around is evidence that the housing bubble is just one of the excesses of the financial markets.

]]> By: minka http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5142 minka Fri, 14 Mar 2008 17:05:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5142 Let the dollar tank. It's the platinum lining to our crisis, via the export sector. <br/><br/>Our industrial base has been hammered in part because of Asian mercantilism. We need the industrial base back. If the EU suffers enough because of the dollar crash, there may be enough political pressure for China to give up its peg. Or imported inflation will cause that. It'll hurt like hell but we will have a path out of this morass. <br/><br/>Our govt has been so dominated by corporate interests that we've allowed the massive outsourcing of jobs so that multi-nationals can sell us ever cheaper goods made in China. That was never sustainable and now the unwind is a big part of this collapse. <br/><br/>Annoying corporate shills like Roach at Morgan Stanley have been talking about rebalancing for years. What we need is rebalancing American democracy, to take power from corporations and return it to the people. Let the dollar tank. It’s the platinum lining to our crisis, via the export sector.

Our industrial base has been hammered in part because of Asian mercantilism. We need the industrial base back. If the EU suffers enough because of the dollar crash, there may be enough political pressure for China to give up its peg. Or imported inflation will cause that. It’ll hurt like hell but we will have a path out of this morass.

Our govt has been so dominated by corporate interests that we’ve allowed the massive outsourcing of jobs so that multi-nationals can sell us ever cheaper goods made in China. That was never sustainable and now the unwind is a big part of this collapse.

Annoying corporate shills like Roach at Morgan Stanley have been talking about rebalancing for years. What we need is rebalancing American democracy, to take power from corporations and return it to the people.

]]> By: Boat 52 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5140 Boat 52 Fri, 14 Mar 2008 16:10:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5140 A severe recession is not a nuclear war and wipe out a huge segment of the population. It would serve to clean house and provide a strong economic base to move forward. Ben B is living in yesterday. Bye bye Ben, the sooner the better. Hopefully the next president will remove him within the first 100days. A severe recession is not a nuclear war and wipe out a huge segment of the population. It would serve to clean house and provide a strong economic base to move forward. Ben B is living in yesterday. Bye bye Ben, the sooner the better. Hopefully the next president will remove him within the first 100days.

]]> By: S http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks.html#comment-5139 S Fri, 14 Mar 2008 15:29:00 +0000 http://www.nakedcapitalism.com/2008/03/krugman-fed-is-running-out-of-tricks/#comment-5139 an is long oil. Gas inventoruies at record highs and record prices. In the long run we are dead. China is only as good as its exports hence the no depeg, yet. let that happen and see if the 24% FA growth is sustainable. Unintended conseq. of dolalr devaluation is fracturing of BWII - -read not good for China industrialization policy. If it doesn't break and dollar rebounds that commodity long will look subprime. an is long oil. Gas inventoruies at record highs and record prices. In the long run we are dead. China is only as good as its exports hence the no depeg, yet. let that happen and see if the 24% FA growth is sustainable. Unintended conseq. of dolalr devaluation is fracturing of BWII – -read not good for China industrialization policy. If it doesn’t break and dollar rebounds that commodity long will look subprime.

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