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And The Person Responsible For Japan's Economic Endgame Is... Paul Krugman
There are two words that should strike fear in the hearts of any rational-thinking citizen of the world - Paul Krugman. Wondering why? As Alhambra's Jeff Snider notes, we already know of at least one respect where Krugman (as a stand-in at least for the Keynesian perspective that is somehow still widely shared, especially in the orthodox economist class) has impacted 'stimulus' activity, Sweden. And now his appearance in Japan enabled what Japanese economists call a "historic meeting," as Bloomberg reports that Abe met with the Nobel-prize winner for 40 minutes who "helped the prime minister make up his mind," that delaying the fiscally-responsible tax-hikes was the right thing to do (and increasing QQE) or Japan "wouldn’t escape deflation." Mission Accomplished... and if it fails, moar will be needed and 'capitalism' will be blamed.
As Bloomberg reports, with a December deadline approaching, Prime Minister Shinzo Abe was considering whether to go ahead with a 2015 boost to the consumption levy. Evidence was mounting that the world’s third-largest economy was struggling to shake off the blow from raising the rate in April, which had triggered Japan’s deepest quarterly contraction since the global credit crisis...
When Japanese economist Etsuro Honda heard that Paul Krugman was planning a visit to Tokyo, he saw an opportunity to seize the advantage in Japan’s sales-tax debate.
Honda, 59, an academic who’s known Abe, 60, for three decades and serves as an economic adviser to the prime minister, had opposed the April move and was telling him to delay the next one. Enter Krugman, the Nobel laureate who had been writing columns on why a postponement was needed.
Honda succeeded in organizing a 20-minute meeting between the prime minister and the U.S. economist. It went about double the allotted time.
“That nailed Abe’s decision -- Krugman was Krugman, he was so powerful,” Honda said in an interview yesterday in the prime minister’s residence, where he has an office. “I call it a historic meeting.”
...
Krugman plays down his role, saying the Nov. 6 meeting with Abe “was very straightforward.”
“He had questions and I hope I answered them clearly,” Krugman said in a telephone interview yesterday. “I told him the kinds of things I’ve been writing -- I hope I made a good case. What effect it had on him is unknown to me. He’s certainly not going to blurt out ‘I’m sold.’”
Following Abe’s Nov. 18 decision to postpone next year’s tax increase by 18 months, Krugman said: “I’m happy to see what they’re doing.”
...
Hamada, who had advised Abe on his pick for Bank of Japan governor, said that “Abe listened to Krugman’s view very carefully.” Hamada said in an interview Nov. 18 that “he probably helped the prime minister make up his mind.”
...
“He said we should be cautious this time in raising the sales tax and if we weren’t it would break the back of the economy,” Abe said. “He said if that happened, we wouldn’t escape deflation, it would be uncertain whether we could revive the economy and repair the nation’s finances. I think that’s the case.”
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And scene...
* * *
However, Alhambra's Jeffrey Snider has strong opinions on just where this leads...
In reviewing commentary about all the posturing in Japan preparing for what looks like, to me, an end of the recovery idea, there was one very alarming passage that I think may be important (and not just widely ridiculous) that ties together failure and the possible future course:
Abe said yesterday he hadn’t decided whether to proceed with any snap election. He has said he’ll decide whether to raise the sales tax by the end of December. Nobel laureate in economics Paul Krugman last week met with the prime minister and urged him to postpone the increase, citing concern it could hurt the economy, according to Abe aide Etsuro Honda, who was present. [emphasis added]
This goes along with something I flagged a little while back in my own, at least, growing sense of a Keynes revival. What I said then seems to be sadly coming toward fruition:
That [the faltering global economy] seems to be a critique of all fiscal and monetary “stimulus” undertaken in the past seven years, and it is. But that setup is as my setup, mainly that the good doctor needed now, according to Peter Coy at Bloomberg, is Keynes. That would come as a major shock to almost everyone outside of the ideology as they might rightly ask whose theories have policymakers and authorities been following all this time?
We already know of at least one respect where Krugman (as a stand-in at least for the Keynesian perspective that is somehow still widely shared, especially in the orthodox economist class) has impacted “stimulus” activity, so his appearance in Japan is not at least unique (of course, he may have been consulting all along in various locations but only now is that being used as something of a positive factor). The timing of this is not surprising, especially in the context of the growing and widespread acceptance of “secular stagnation.”
In other words, Krugman’s primary critique has been to proclaim economic deficiency, which makes him look quite prescient. However, his basis for undercounting the “recovery narrative” is “austerity.” He has seen the lack of government spending in the past few years as the primary contribution to the weak growth environment. Now that the “weak growth environment” has become more widely accepted, not quite fully (yet) displacing the monetary-driven narrative, the danger is obvious.
So the appearance of Krugman and this new(ish) affinity for Keynes is not that authorities have been ignoring Keynes’ philosophies for seven years (which cannot be claimed) but that they have not done “enough” Keynes to this point – which is Krugman’s main point of emphasis and has been all along.
Within that framing the Bank of Japan should be doing even more QQE at the same time the Japanese government abandons any fiscal sense, scraps not just the future tax increase but likely the last while undertaking infrastructure “investments” (shovel ready, of course) on a biblical scale. In that sense, nobody probably should point out what Japan did in the 1990’s, as that probably wasn’t the “right” amount of Keynes either.
We have been living in the age of Keynesianism reborn from crisis (which his theory contributed mightily toward), but now we are being told that though it may have been some Keynes it was not enough Keynes. Apparently, like QQE purchases of Japanese government bonds, there is a magic and sadly secret formula which in the exact right formulation delivers enchanted economic properties. For some reason, like every monetary point, central banks and governments keep falling short in their mixtures as the answer to all our problems is always more and more of it.
As with a lot of changes taking place, there is a positive in that failure is not being ignored now as it had been uniformly in the past. Though certain “markets” don’t seem to be getting that message, that even the very practitioners of “stimulus” recognize if not its full failure then at least how far short it falls of intentions and expectations, it is a growing sense of nervousness groping for some answer. Unfortunately, the Krugman answer represents nothing more than the path of least resistance, as a way to maintain the status quo but still recognize reality.
I suppose if the distance between these bouts of actual awareness is long enough, we could sadly be in for interchangeable failures of different pieces of statist intervention. We started with Keynesian government “stimulus” that relented to purely monetary “stimulus” and now seem to be heading back toward government spending once more. Once that inevitably fails, “they” will probably resurrect “Friedman” to replace “Keynes”, this time with the “right amount” of monetarism (rereading Chapter 11 in A Monetary History probably). And so it will go back and forth with nary a reference to the actual economy until the entire globe is encompassed in fullblown Japanification for a quarter century or more (which would be a depressing and desolate future, especially as past history surrounding desperate economic times almost always ends in significant conflagration – political history is really economic history without all the math).
And “capitalism” will be blamed the entire time.
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Paul Krugman is the Hannibal Lecter of economics. He whispers a few words through the bars and he can help you catch a serial killer or he can make you swallow your own tongue.
But it's always HIS game, not yours.
Krugman needs to be put away in a very dark, very desolate place for the rest of his life. For the safety of everyone else on the planet.
If you'd like to hear Paul Krugman's story as told by Paul Krugman, here's some recommended reading (not a joke link):
http://www.pkarchive.org/personal/Strangelove.html
Strangelove is the guy who asked him questions, Krugman answers as himself.
He's an only child (which explains a lot). Two marriages, no kids. Probably because he ate them. Wife #1 escaped with her life, but suffered deep emotional scarring.
The only heartening thing is he will leave no spawn behind to torment others.
Physically, yes, but his ideological children are everywhere.
How is that possible, I thought abortifacients were covered under ObamaCare ;-)
What about lobotomies?
Presumes there is something to operate on ;-)
Hey oh! +1
He'll be here all weekend folks. Try the veal and please, tip your waitress.
Add in Ben and Janet, you get the four horsemer(de).
Shouldn't Japan finally prove Krugman wrong and make him STFU? Alas no, Progressives and Progressive economists are never wrong, so the excuse will be that Japan has structural problems as a result of demographics. So, excuse me Paul, but then what IS the solution for Japan and, if it was never going to work, why would you recommend to Japan that it should trash its currency and economy with QE on steroids?
I am not holding my breath for answers in the OpEd pages of NYT...
Alky not drying out. Must drink MOAR.
zh don't get frog humor right.
Paul Krugman is a total economic dumbshit...
And any country who hitches their star to his failed wagon...
Deserves the bankruptcy they'll get!
My esteemed down-voter(s)...
Please explain your reasoning for your support of Krugman.
I'm all ears!
Surely... If you take the time to down-vote someone...
You must have a logical reason which you can intelligently defend...
Right?
Otherwise, we must conclude...
You're just another fukin' "junk-n-run" socialist!
It was probably the maggot himself
im his mother...and you cant talk about little special needs pauly like that...so LEAVE PAULY ALONE!!!!
and that sir is why you have 2 down votes....1 from me and one from his other mother...
The only govt stimulus available is moar war and moar amnesty EBT
double post...ever since micro 8 forced itself on my sysytem(which i dont use) been having issues with reconnection problems thru firefox...anyone else?
Krugman is correct because any sales tax increase will curtail Japanese consumer spending, which will reduce aggregate demand.
In April this year, the sales tax was increased from 5% to 8% and now the Japanese economy is in a recession.
Japan should reverse the last increase or they could also increase fiscal stimulus to get Japan out of recession.
Of course, give people money and everyone is rich! Genius! If I had only gone to Princeton, I would have known this a long time ago. Thank mammon for our benevolent and sick and twisted masters.
Doesn't Japan know those kinds of taxes are why NY NJ and IL lose 30% of their population in 20 years and pressures moar tax hike death spiral
u be dead before whole system collapse.
millenars of ponzi...
abuse someone to get position, like...wait...any board game ?
isn't goal of life ? get the better for yourself, whatever amount of shit you put on neighbour's neck ?
com'on, be real, for once.
It is required to be a dumbshit to win a Nobel prize these days...?
It's not a Nobel prize. It's the Swedish central bank's prize for "economic science" in memory of Alfred Nobel.
Nobel new fine well that economics is not a science.
Ahh yes. Apostle Paul Krugman, just like the other Apostle Paul who lead millions of stupid ignoramus's into a false paradigm, yielding misery and corruption.
Probably because he ate them.
That was a nice one. Had a good laugh. Keep 'm coming, NoDebt.
He took his nephews on his second honeymoon. WTF?
and after that meeting Abe met with a Parkinsons patient on how to handle mason jar full of Nitroglycerin
“I collect church collapses, recreationally. Did you see the recent one in Sicily? Marvelous! The facade fell on sixty-five grandmothers at a special mass. Was that evil? If so, who did it? If he's up there, he just loves it, Officer Starling. Typhoid and swans - it all comes from the same place.”
- Thomas Harris, Silence of the lambs
Pass thE Dutch bruh.
Http://www.hedge.bz
NoDebt: Do you recall one of the most graphic, yet best lines from Silence of the Lambs during the prison interview between Clarice and the good Doctor?
"I can smell your cunt"...
That's what I would say to Krugman if I ever had the displeasure of meeting him (as I begin to prepare some fava beans with a nice Chianti).
That was Multiple Miegs who said that to Starling from the cell next to Lecter. Lecter found that a distateful comment and as was later retold "Lecter was heard whispering to Miegs, who was crying. The next morning he was found dead. He swallowed his own tongue."
Krugman strikes again.
OMG you're making me feel Hitlary would be a good choice in comparison
=)
Where did Zimbabwe NOT follow Krugman's advice?
This feels like an inception, where we are on a burning plane flying into a ship out on the high seas, as Krugman adjusts the controls.
They think its cool flipping with all the zeroes and printing the fiat, a few more should do it. There is probably some allegory here.
And Krugman knows it's an inception and he has a key to exit to his hideyhole any time he wants, so he believes.
'Working' until the end.
Yup.
Forty minutes of conversation with Krugman is very expensive ....
How much does a two-hour lecture?
hehe.
Krugman: A quadrillion should do it.
nmewn: Make it 100 billion quadrillion and then you're talking real money.
I recall a few years back when the USofAID blew through the $15 TRILLION barrier and a ZH wag (I think it was nope1004) said:
"When I was kid $15 TRILLION was a lot of money"! /s
I think we can remove the sarc tag from any further comments about USofAID debts.
They love dem some $3,000 candy bars don't they?
Sooner or later everyone will understand what inflation really is, its not the value of a candy bar going up, its the value of the currency buying the candy bar going down.
Fawtunately, I keep mah feathers numbered fah jest sech an emugency ;-)
So the whole world will be turning Japanese for 25 years of deflationary hell? Maybe, maybe not, but whatever happens, you can be sure that Krugman will never, never, never admit that his prescriptions were wrong-headed. He'll simply claim we needed more MOAR.
What is the Amish solution?
Amish did not answer but I can give you an idea of what it would be:
An egalitarian society that produces does return, it is called barter.
That word is like speaking of the devil to the banksters in barter there is no way they make money.
Another thing, gold is the reserve currency, it is what you keep for retirement or their children and grandchildren.
hehe.
There are other options but do not work in the long run.
You can create territories with underdeveloped as people in Mexico, Gaza, Lebanon or Sisjordânia, NAFTA can create or put a wall.
Thus get cheap labor.
History shows that this kind of attitude does not last three generations.
Subjugated resent insane rage.
Who subdues spends too much money and weakens.
Unfortunately for you, we are seeing that in your case, is the culmination of an Empire.
I feel sorry for you.
: - /
Has this guy ever run even a lemonade stand?
And can a lemonade stand solve the problem of Fukushima?
CB's can only have one thing (target )in mind: coverin' their tracks to include whittling down vlad/china.
Ah, enough of thees BullChit! Catch a movie; Dumb and Dumber To. Chock full of racial stereotypes, and that's just the first 11 minutes.
Harry's parents are, ROR, Asian.. Goes back to visit his parents:
Henry knocks on door
Father opens door say, "Rong time Harry."
Harry starts to leave, Father says, "No, I mean long time no see"
LMFAO
*************************************************
Harry needs kidney, perhaps from parents:
Father says, "Harry we love you..."
Jim Carrey (Lloyd) says, "Yeah, but do you love him long time..."
LMFAO
Edit: Name is Harry not Henry
Instead of trying to create inflation through money printing, they should change the law so taxes must be paid using US dollars instead of Japanese yen. Bam, instant devaluation as millions of people sell yen and buy dollars to pay taxes.
His masters restrain the rest of us.
You limit yourself. His propaganda cloud can only rain on you if you let them.
Let go. Let go
Let go.
I'm in a darker mood, I'm not thinking restraint anymore.
Nor should we be thinking restraint. Putting the head of GOP Establishment on a pike while the Progressives rot on the vine would be a great resolution for 2015.
What better way to test the resolve of the rank and file of The Police State?
Banzai, lacked a wad of 25,000, is the more crazy it pays to listen to the crazy!
hehe!
:-)
Forty minute monologue with Krugman.....enought to make a guy want to commit hari kari.
You just gotta give it time, after all look how well Enron worked out...
It just occured to me that what Paul Krugman is doing to those poor old Japs is getting even for what the Japs did at Pearl Harbour plus more.
I think when America[1] dropped two nuclear bombs on Japan, killing several hundred thousand people instantly and sentencing many more to a slow painful death that pretty much covered it, and then some.
[1] The only country ever to use nuclear weapons against another.
Dumbass.
Wow, Paul goes to Japan to righten their QE decisions?
The endgame (for the US) must be closer than I thought.
Paul Krugman - the sheep whisperer.
Oh Gawd. So Krugman is big in Japan.
Makes the French seem sane for worshipping Jerry Lewis and the Germans for fawning over David Hasselhoff, doesn't it?
Why is this man permitted to breathe?
Whew... I'm glad that Krugman got things straightened out and Japan's economic problems are now fixed. This can only help the global economy and ours. I guess it's safe for me to sell all that ammo and canned food I've been stockpiling.
Did Krugman tell them about the alien attack yet?
A ridde is, how do we get through the future at all, if we need to get along, white, black and everybody in between, from our current state of affairs how are we going to do this and maintain our individual cultures?
Four major ways in achieving this would probably be:
1. Common adherence to the rule of law and the rule of law being equally applied to all.
2. General prosperity rather than prosperity being sucked up by only the top .1%, because poverty breeds instability.
3. Good solid basic education that graduates students with a decent ability to read, write, calculate and comprehend.
4. A penal system that actually rehabilitates the bulk of the offendors rather than just punishing them. This stops them from becoming repeat offendors as well as preparing them to be productive members of society once they are freed.
Prisoners must want to be rehabbed. Most prison systems have done that, tried that. Most crimes performed by repeat offenders who have been rehabbed.
4° no way = genetical.
must keep killing to clean. you usa is still nice for that, leathal punishment for certain type of crimes should be applied all around the planet :
you behead someone ? you get killed by the sword/guillotine. ( something slow and painfull as possible )
you rape childs ? dickcuted put in throat then hung.
you shoot someone ? same shot applied to you.
world cannot handle amount of crazy sick fuck. they get heat, food, they stay comfy in jail while some workers have no home ? fuck me, wipe them all.
Wasn't Krugman hanging around this site about a year or two ago?
If he was he probably became depressed by the number of down votes he was receiving.
This could be straight out of The Onion.
'Cept it's not.
Hey you let me steal, through FRAUD,l as much money as Krugman has and I'll tell you the same thing M'Fers.
Paul continues to ignore asset inflation, which will eventually cause great pain. Problem is this process takes longer than most think, usually after the realists are totally discredited.
He is an economic hitman. Who does he work for?
Fuck off with your "fiscally-responsible tax hikes", alright!
How about fiscally responsible national debt reduction?
Al Gore, Barack Obama, and Paul Krugman - All Nobel Prize winners. What else can be said?
Krugman has to be the worst comedian I've ever listened to. Bring back George Carlin, and pardon Bill Cosby.
Krugman is an idiot.
I like to assume these people are just evil and have an agenda you don't know about instead.
Smugman is right about that sales tax though. If you're stated goal is to increase household spending, a sales tax hike is pretty idiotic (even if threatening a sales tax hike isn't).
Fiscal responsibility is a joke anyway in a country that owes 220%+ of GDP, mostly to its own burgeoning senior class, in a currency that yes, it can print itself, but only with a printing press running on cheap oil.
What's the definition of insanity?
Doing what Krugman says over and over and expecting a different result.
The patient needs moar leeches applied
It's the Krugman MOAR!
With new improved BIGGERER MOARs!
"And now his appearance in Japan enabled what Japanese economists call a "historic meeting," as Bloomberg reports that Abe met with the Nobel-prize winner for 40 minutes who "helped the prime minister make up his mind," that delaying the fiscally-responsible tax-hikes was the right thing to do (and increasing QQE) or Japan "wouldn’t escape deflation." Mission Accomplished... and if it fails, moar will be needed and 'capitalism' will be blamed."...
“That nailed Abe’s decision -- Krugman was Krugman, he was so powerful,” Honda said in an interview yesterday in the prime minister’s residence, where he has an office. “I call it a historic meeting.”...
Hmm?.... Seems like only yesterday...
Could of sworn that other meeting with Paul (the Nobel Prize winner) Krugman took place a week before March 11, 2011 informing Abe that he would be the new Prime Minister in the coming year?!!!..
The only way out for Japan is to dissolve the BOJ and cut taxes drastically/completely. Basically the same as the United States.
That's Paul Krugperson, must always be correct here on ZH.
"So the appearance of Krugman and this new(ish) affinity for Keynes is not that authorities have been ignoring Keynes’ philosophies for seven years (which cannot be claimed) but that they have not done “enough” Keynes to this point – which is Krugman’s main point of emphasis and has been all along."
Doing more of what doesn't work in the first place, is NEVER going to be enough.
Ha ha is funny clown