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Summers Goes M.A.D., As Krugman Contradicts Bernanke And Says Both Low And High Rates Are Good For Economy
The person who according to many, if not all, has been the most destructive presence in Obama's economic advisory team, and is luckily getting out of the White House soon, has decided to remind the world yet again of his worthless and capital destructive presence, throwing out yet another Mutually Assured Destruction bomb. As Reuters reports, citing the man who almost destroyed Harvard's endowment, and subsequently, America, "Failure by Congress to pass a
tax deal in the next couple weeks would "materially increase"
the risk of the economy stalling and a double dip recession." And just to make sure that people don't forget him as the person who was 100% confident that a stimulus is the response to everything, he also added that Obama would like to see the Build America Bonds program extended.
And if that wasn't enough to induce vertigo, we now have Krugman directly contradicting his master Bernanke. On his blog this permastimulizer (second only to the individual reference previously), says the following:
Rates began rising a few weeks ago as data began to suggest a somewhat stronger recovery than previously anticipated (stronger, not strong — we’re still looking at years of very high unemployment). They rose again in the past couple of days on the belief that the stimulus part of the tax deal would actually lift the economy to some extent.
But, but, just a month ago Bernanke said precisely the opposite:
For example, lower mortgage rates will make housing more affordable and
allow more homeowners to refinance. Lower corporate bond rates will
encourage investment. And higher stock prices will boost consumer wealth
and help increase confidence, which can also spur spending. Increased
spending will lead to higher incomes and profits that, in a virtuous
circle, will further support economic expansion.
So there you have it: lower rates are good for the economy and stocks, and higher rates are, wait for it, even gooder for the economy and stocks.
The bond vigilantes, who we are fully confident will soon be branded as terrorists once they presence becomes increasingly more felt, lose again and always: becuase two completely contradictory Ph.D.s say so.
h/t Ernst
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lmfao !!!
I loathe the Bernank and the Krudman in equal measure. But to be fair - aren't they talking about two different things here?
Uncle Ben is talking about the effect the Fed's lowering rates has on the economy... the Krudman is talking about the market's response to what it perceives to be an improving economic situation?
I disagree, on both points, but I don't think they're contradictory.
Meanwhile... what happened to The Turd? I'd like to know his thoughts on the recent PM smackdown.
Yoo hoo, calling The Turd...
Yawn. ZH has been predicting hyperinflation since late 2008, due any day now. It's been two years and we are still waiting. If it's a trading strategy then it's been a losing one so far.
Here you go. Mike Maloney gives you the run down as to how it will progress - you impatient, greedy, lil' bastid! LOL! /j/k
http://www.youtube.com/watch?v=419aPXb7Uhg
I'm speechless! ??? WTF is going on in DC? Is there anyway to short Krugman?
everybody's consuming large quantities of hard liquour.
I think you have a typo there. Should be *shoot*
http://www.youtube.com/watch?v=SWv53OJ-ydI
Summers & Gorden Brown both going off on the same day.....
Must be the moon or something :>
"Gordon Brown warns of imminent euro 'high noon' .... moment of reckoning early in the New Year."
http://www.bbc.co.uk/news/business-11953413
i think we've seen that playbook --- give us what we want or we will implode the system, marshall law, atm's go empty, 25% unemployment.....
All of them should be banned from use of the word "virtuous" as they have no idea what it means. They must have skipped Ethics when getting their PhDs.
Summers takes the long view of things, as in: "I'll be long gone when the lynch mob comes a-knockin' at my door"
For all the wailing and knashing of teeth regarding:
- Ireland implosion
- Greek meltdown
- Wikileaks
- Portugal, Italy, Spain on edge
- China tightening
- Outright meltdown in the bond market
SPY is still pretty much pinned at the highs.
@robo
Viagra can do that, but priapism is a serious, even life-threatening condition.
But what a way to go!
Spoken like someone who has never had a hard on for more than an hour at a time.
and the 10 year is now yielding 3.24% compared to 2.90% last week. seems strange to me.
Dear RT,
I have defended you in the past because you have made some good calls on your day trades.
But, you are not seeing the bigger picture. Ireland hasn't imploded yet because the current gov decided to bend over to the EU. Can't wait to see what happens in their next election early next year - Sinn Fein anyone? And I can't wait till the IMF imposes austerity measures on the USA. Not sure how long that will take but I'm 99.99% sure it will happen.
And most importantly, I asked you for some eye candy for the female readers of ZH. Alas, disappointed again.
IT'S A FUKKING CIRCUS!!
http://www.youtube.com/watch?v=idsxgLjGXGI&feature=related
http://www.youtube.com/watch?v=uGHsxMqpL0c&feature=fvw
Our critics may have text books on economics, but we professors have the books with answers in appendix D.
Ahhh...I had momentarily forgotten about the narcoleptic 'genius' that is Larry Summers.
Exactly how much fail can an administration pack unto itself?
How much fail can a human polyp pack if a human polyp could pack fail?
Mary says,
"We need the tools that will enable us to keep up with market participants who are placing thousands of orders per second."
(I thought they already were tools............;)
http://www.marketwatch.com/story/schapiro-sec-must-upgrade-to-find-manip...
Does she mean that they need tools to tax the 1000's of trades per sec done by the HFTs? Or do they have different rules the the slower carbon based traders?
http://globaleconomicanalysis.blogspot.com/2010/12/food-stamp-usage-up-1...
The made up number multiplier for food stamps is what, 1.79 - well above the breakeven point. Food stamp usage up 16% - pretty soon we can all be riding the gravy train (I'm not sure you can use SNAP for dog food) to prosperity - Food Stamps for all!
Yes, much better to watch milk thrown in the streets and veg rotting on the vine unpicked.
Good point, I don't know what the multiplier is for farm subsidies.
Rising rates are ungood unless they are signaling that the economy is shifting from goog to plusgood. With a few keystrokes Bernanke can lower rates which means the economy will be doubleplusgood.
Given the robo-rocket-science-Ivory-tower-dogs we obey , I would expect the SPY to be pegged at max high when the order is given to throttle-up for insertion.
O-rings you ungrateful bitchezzzzzzzz.
"Consumers" own stocks? Since when? Then, without selling and realizing their (illusory) gains, they will feel confident enough to borrow and spend, fueling the structural trade deficit? That's the plan? Really?
AIG's shares just halted in trading ....
There is the question of why the bond market is falling.
In the past 48 hours, oil has fallen. It clearly does not see booming economic growth. Other commodities have also fallen. They do not see booming economic growth.
So the booming economic growth theory for bonds falling does not seem to explain all the data, or even most of it.
Is China driving the price down? Into the teeth of POMO buys? Makes no sense; it would hurt the value of their own holdings.
In fact, logistically, it's very puzzling that the POMO buys are not stopping the decline. There are not very many people who can counter the POMO $6Billion events. Perhaps there are some newly hired Fed employees assigned to buy Treasury securities during the daily POMO, and in their desire to do a good job, they are demanding lower prices from the sellers. That would be amusing.
Something is indeed puzzling.
Permanently
Held
Dogma
Takes 6-8 years to inculcate; and a lifetime to fester; leads to abject senility, usually starting in the 40's, but very pronounced as one passes 50.
AIG Halted... pending
(flyonthewall)
Waddell - nope not me, Reed -- no way man no way!
http://blogs.marketwatch.com/fundmastery/2010/12/08/jon-stewart-the-bern...
Summers was a tenured Harvard professor before the age of 30. He's one of the smartest guys on the planet. Jealous Losers are Jealous Losers.
Another super genius:
Ted Kaczynski"an intellectual child prodigy, he excelled academically from an early age. Kaczynski was accepted into Harvard University at the age of 16, where he earned an undergraduate degree, and later earned a PhD in mathematics from the University of Michigan. He became an assistant professor at the University of California, Berkeley at age 25, but resigned two years later."
http://en.wikipedia.org/wiki/Ted_Kaczynski
And another jealous loser.
The professor on Gilligan's Island was pretty smart too except he couldn't patch a small hole in the side of the SS Minnow. The captain of the Titanic was a smart guy too...
Gilligan...nice one.
and a fool KNOWS he is the smartest guy in the room always.
A scum and killer of humans with his policy.
Some of us have memory longer than his stubby and we don't imbibe the smartest swill his flunkies dish to the serfs.
summers = brilliant sociopath bribee
And Enron had the smartest guys in the room.
And Long Term Capital Management had bona fide, genius, nuclear physicists working for them.
And the smartest guy in the U.S. currently tested on the standardized I.Q. test works as a bouncer in a Massachusetts bar.
Tyler you dont get it.
High rates because people is not confident is bad, but high rates because people expects inflation is good. And Krugman can use his telekinetic powers to know what people is thinking and report in the NYT. Thank god for Krugman.
In the future historians will study keynesian economists and laugh the same way we study mercantilist economists and laugh. The lies of the elites to justify their power are funny 200+ years after.
9 out of 10 failures in the private sector who go on to become tenured professors of economics recommend Krugman to their patients who chew Keynes.
I own 160 acres of prime wheat ground in Idaho. I'm selling short Sept. 2011 what today. LMFAO!!!
larry has no vested interest in millionaire's tax-cuts or in things like capital gains; therefore he's speaking from the heart when he tells us what's best for the nation and the economy.
also, i'm sure he wasn't the economic advisor quoted by someone on the hill two days ago who advised obushma that if the didn't do something about the expiring tax breaks that the stock market would plunge 10% - 15%
This godless whore of a scumbucket doesn't even bother to hide the fact that he will not speak without being paid or having a speaking gig lined up.
He has killed or almost killed anything he has touched.
That a clown like this is let out during the day is a confirmation that this place is FINISHED!
ms. scumbucket called to say, "nuh-uh ... he ain't mine!"
Massive dollar weakness today, and equities have investors playing hot potato. Guys like Summers have (had!) failed actual economic and fiscal policy while academia postulates that Krugman's "If You Build It...They Will Loan" can play. Who from the banks said they would loan out the cash? Working in theory goes until the field.
Dollar up today.
Strength in European currencies, today.
The big question - Will silver/gold get blowtorched afterhours ....
Gold will win the week. $1440 friday close.
The overnight rise in the stock index futures is pretty much a sure thing tonight. The only way to lift the market is overnight thru the stock index futures.
"This extra liquidity is very, very cold, but it's going to be so stimulating."
(Apologies to Helicopter Frank Zappa)
QE is nothing at all like a wet t-shirt contest.
Gooder!! LS self combusts
Why is it everytime #uckin time I see or hear Krugman's name mentioned, I get these great uncontrollable urges to want to break things?
In 1788, France faced daunting fiscal deficits due to royal extravagance and military spending, which, combined with ineffective taxation, rendered the government essentially bankrupt. Less than a year later, the chaos of the French Revolution began in earnest. In an attempt to prime the pump of the economy, the government issued government debt secured by expropriated church property. Easy money became addictive and several more debt issues were arranged. The excessive reissuance of these notes caused the money supply to skyrocket and hyperinflation to ensue, exacerbating the violence of the Revolution. By the end of the 18th century, all the issued government debt was repudiated and became worthless. The years of fiscal turmoil were finally put to rest by Napoleon Bonaparte, who adopted the franc, and never returned to paper money. Voltaire predicted such an outcome, saying, “paper money eventually returns to its intrinsic value.”
a few interesting things I learned today:
according to wikiLeak, the popular Australian Prime Minister was ousted to everyone's shock and horror by a coup in his own labour Party,orchestrated by a Wiesel called Mark Arbib who had regular contact with the US Foreign Affairs department.According to the files,Kevin Rudd was not liked much by the US Foreign Affairs department,since he was no easy push-over with the Iraq and Afghan War.So it was decided to try and oust the Prime Minister.Overnight Kevin Rudd was ousted by the labour party right-wing faction and deputy Julia Gillard was installed as care-taker PM, on advice of Arbib ,calling for a new election. Most Australians,were "very surprised" many even shocked...
well,maybe now Kevin Rudds demise "with a little help from the US" does not surprise that much anymore !
and because of shit like this,wikiLeaks is important !
http://www.theaustralian.com.au/in-depth/wikileaks/labors-mark-arbib-def...
on the subject of Fiscal Stimulus I like Niall Ferguson's view in this
Bloomberg Article below:
Krugman, Niall Ferguson Renew Debate Over U.S. Fiscal Stimulus
By Bomi Lim and Michael Heath
Oct. 13 (Bloomberg) -- Nobel Prize-winning economist Paul Krugman and Niall Ferguson, author of “The Ascent of Money: A Financial History of the World,” clashed anew today over how to revive the U.S. economy.
Krugman, 57, a Princeton University professor, is urging the Obama administration to undertake a second round of fiscal stimulus, while Harvard University historian Ferguson, 46, warns such a course may trigger a “debt spiral” in the world’s biggest economy.
“The risk is that at some point your fiscal policy loses credibility in the eyes of investors,” Ferguson said at the World Knowledge Forum in Seoul. “Then, very quickly, you will find yourself in a debt spiral of rising rates, widening deficits, crumbling credibility and yet more rising rates.”
The debate comes as minutes of the Federal Reserve policy makers’ meeting on Sept. 21 show they were prepared to ease monetary policy “before long” as growth slows and the jobless rate remains near a 26-year high.
“We actually never did significant fiscal expansion,” Krugman said at today’s forum, appearing beside Ferguson. “What does a trillion dollars of borrowing do to the U.S. long-run fiscal position? The stimulus right now makes almost no difference.”
The administration’s two-year $814 billion stimulus program ends Dec. 31, and Krugman said two months ago another $800 billion is necessary. While the National Bureau of Economic Research said in September that the worst U.S. recession since the Great Depression ended in June 2009, the unemployment rate held at 9.6 percent last month.
Investor Confidence
Ferguson said the U.S. risks losing investors’ confidence as more spending exacerbates its weak fiscal position, adding the U.S. debt situation is worse than that of Greece. Krugman dismissed the comments, saying there is no evidence in the markets that bondholders will flee.
“The markets are fine until they are not fine,” Ferguson countered.
“For more than a year since our debate began, it’s the Chinese who’ve been consistently agreeing with me, saying that they regard the course of U.S. fiscal and monetary policy as dangerous,” the Harvard professor said. “So it’s not just me you are arguing with Paul, actually, it’s the Chinese government.”
China in July held almost $847 billion in U.S. Treasuries, more than double the amount it held four years earlier.
U.S. economic growth slowed to an annual rate of 1.7 percent in the second quarter from 3.7 percent in the first period. The growth figures are adjusted for changes in prices; nominal gross domestic product doesn’t adjust for inflation.
The economy probably expanded at a 1.9 percent pace in the quarter ended Sept. 30, according to the median estimate of 62 economists surveyed by Bloomberg News.
Krugman, a New York Times columnist, wrote last year during a previous clash that Ferguson “hasn’t bothered to understand the basics” of economics. Ferguson has said Krugman’s economic assumptions are based on a “flawed” reading of John Maynard Keynes’ model.
http://noir.bloomberg.com/apps/news?pid=20601108&sid=atKfRmN8UK7k
Last Updated: October 13, 2010 02:41 EDT
I sincerely believe that in the grand scheme of things, Bernanke and Krugman are just ignorant dogs who will wake up to the folly of their ways and end their lives in regret. Greenspan was evil. He was smart enough to know that he was knowingly destroying the USA. Bernanke and Krugman think that they are doing their best for USA. Little do they know that their education have been purposely posioned and that they are made used of.