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Krugman Warns Of “Gigantic Bank Run”, “Emergency Bank Closing” And “New Lira”

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Wed, 11/02/2011 - 08:09 | 1836121 DonutBoy
DonutBoy's picture

Few things have made me happier about my AU stockpile than hearing that Paul Krugman was a gold bear.  By their enemies...

Wed, 11/02/2011 - 08:16 | 1836137 MillionDollarBonus_
MillionDollarBonus_'s picture

Dr Paul Krugman has been warning about a double dip recession for over a YEAR now. This economic crisis is going to get a lot worse due to indecisive fiscal policy from governments around the world.

Wed, 11/02/2011 - 08:25 | 1836156 Snidley Whipsnae
Snidley Whipsnae's picture

MDBonus... "This economic crisis is going to get a lot worse due to indecisive fiscal policy from governments around the world."

..........................

I take it you believe central bank monetary policy has nothing to do with the slow motion train wreck the world economy is now involved in?

Dr Krugman? Maybe a Quack but not a doctor.

Wed, 11/02/2011 - 08:33 | 1836170 MillionDollarBonus_
MillionDollarBonus_'s picture

"Maybe a Quack but not a doctor."

You know, I really don't appreciate this kind of childish discourse. America is facing some serious economic issues, and its time to grow up and discuss realistic solutions to our problems. The Occupy Wall street movement has identified some key policy initiatives that could really get this economy moving again:

1. Force greedy corporations to hire more workers and lower prices instead of keeping all the money for themselves
2. Force banks to lend instead of hoarding capital
3. BAN all speculation in the markets by traders and hedge funds which is causing tremendous price volatility
4. Ban credit default swaps and prosecute rating agencies for giving bad ratings

A few common sense policy initiatives like this coupled with further fiscal and monetary stimulus will sort out this economy once and for all.

Wed, 11/02/2011 - 08:42 | 1836196 Mercury
Mercury's picture

ZH's very own cyber-socialist Colbert.

Someone give this guy a show already.

Wed, 11/02/2011 - 08:44 | 1836205 Smiddywesson
Smiddywesson's picture

MDB,

Sorry to be "childish" and dare to disagree with one so wise as Krugman, but price controls, market holidays, and forced hirings have been tried before and failed miserably.  Another aspect of childishness is simple innocent ignorance.  More stimulus isn't going to fix this, and there haven't been ANY common sense policy initiatives because of the birds and the bees of how our society works, nor will there be any until this abomination of a society collapses.  Sorry kid, that's it.  We are lemmings, and we chase momo until our financial system becomes a Sargasso Sea of tangled paper.  We ARE jumping off the cliff together because it is our nature.

Better bring your life ring (gold).

Wed, 11/02/2011 - 08:54 | 1836236 Jeff Lebowski
Jeff Lebowski's picture

Walter, I love you, but sooner or later, you're going to have to face the fact you're a goddamn moron.

Wed, 11/02/2011 - 08:55 | 1836248 Snidley Whipsnae
Snidley Whipsnae's picture

I really don't appreciate your apprasial of the Quack Krugman! He has been publishing bs articles in a leading US paper for years... and, unfortunately, some people took him seriously...and it cost them dearly in dollars.

Meanwhile, you come off like some policy wonk defending this quack!

Whether OWS will have any beneficial impact will be determined in time but right now I would say they are succeeding in getting themselves, individually, on every fucking shit list that our government is compiling plus beat up by thug cops hired by Wall St, et al. I wish OWS luck.

As for your '4' points above... childish. You cannot 'force' banks to lend nor can you force consumers to 'borrow'. Period.

Forcing capitalist corporations to 'hire'? This is a reccommendation for more centralized planning... exactly why we are where we are now. Another childish suggestion.

'ban all specs in mkts'... You are suggesting that we do away entirely with free markets? The specs ARE the market! Without specs there is NO price discovery... another childish suggestion on your part.

I will agree to your point '4'.

Plus, reimposition of Glass Steagle act.

" A few common sense policy initiatives like this coupled with further fiscal and monetary stimulus will sort out this economy once and for all."

Depends on your definition of 'sort out this economy'... Your first 3 suggestions would have it further into the shitter than it already is... which is saying a lot. Getting rid of the Fed in 1914 would have helped the US economy tremendously.

 

 

 

Wed, 11/02/2011 - 09:30 | 1836297 TruthInSunshine
TruthInSunshine's picture

The following is the hypothetical 'what if Krugman wrote this' post that would cause me to re-assess my opinion of Krugman, and upgrade his opinion(s) on anything economi from DDD- to investment grade, as it would mean that he's admitted that his vocation endorses a massive fraud intended to keep the status quo in place:

 

"Hi, I am Paul Krugman, and I'd like to share with my readers precisely how they are all being conned by what is nothing less than a global, coordinated fiat-based Ponzi scheme, based on a ruse known as fractional reserve banking.

Here's how it works:

1)  Create fiat using nothing more than an computer/ledger entry, backed by nothing of inherent value, that has legal recognition.

2)  Circulate such fiat via loaning it out, charging interest upon it

3) Successfully get nations, business entities and individuals to borrow said worthless fiat that was conjured from thin air, and pay interest, pledging their real, inherently valuable assets in exchange for said worthless fiat (i.e. meaning that their real, inherently valuable assets can be taken if the conditions that make it impossible for them to repay the worthless fiat are [intentionally] induced).

4) Set the rate of interest payable on the loans of fiat that was conjured from thin air, solely at their discretion.

5) Supply more of such fiat, or withdraw fiat, to/from the system, at their discretion, bringing about inflation or deflation.

6) During times of large scale loan defaults, on the repayment of the fiat that they conjured from thin air, backed by nothing of inherent value, seize the most valuable assets that exist on the planet, many of which mankind depends on for its very survival."

 

 

Wed, 11/02/2011 - 11:16 | 1836848 Doubleguns
Doubleguns's picture

He might give up but he would never make a statement like that. His ego is just to big.

http://www.americanthinker.com/2010/08/paul_krugman_gives_up_1.html

Wed, 11/02/2011 - 09:10 | 1836307 Iam_Silverman
Iam_Silverman's picture

"As for your '4' points above... childish. You cannot 'force' banks to lend nor can you force consumers to 'borrow'. Period."

Yeah, he had me scratching my head over those points too.

But, if we force small businesses to hire people they don't need, then they will have to borrow to stay afloat - at least for a little while.

Glass-Steagall?  You betcha!  I am on the fence about limiting speculation in commodities to only those who take delivery.  While I understand the need for some to hedge by forward-contracting, it really pisses me off sometimes that the price I get for my calves at the sale barn may be influenced by live cattle futures held by investors that never plan to take possession of the contracted goods.

Wed, 11/02/2011 - 09:15 | 1836324 MillionDollarBonus_
MillionDollarBonus_'s picture

"Without specs there is NO price discovery..."

You fail to realise that price discovery by general market participants is inaccurate, uninformed and subjective. Just look at the price volatility we are seeing in the markets today - this is because market participants are uneducated and hysterical. The mathematical models of economics professors are a far more objective means of setting prices.

Wed, 11/02/2011 - 09:28 | 1836355 RSDallas
RSDallas's picture

Heil Hitler!  You must have grown up in a very controlling environment.  The mathematical models of the Krugman clan is inherently flawed with he thought that central government planning is the answer to all that ails.

Wed, 11/02/2011 - 09:36 | 1836397 Snidley Whipsnae
Snidley Whipsnae's picture

"You fail to realise that price discovery by general market participants is inaccurate, uninformed and subjective."

Yes...and to a great degree 'market participants' are being misled by markets that are warped by central bank manipulation/intervention in all asset classes. The 'hysteria' you are witness to is most probably HSTs front running every trade for a few pennies gain. In addition markets are warped by QE, interest rate fixing/intervention, and all manner of other manipulations by central bankers. In summation, we don't have any fucking market price discovery anymore. We might as well be living in the fucking CCCP in 1960 because what they had we now have. Any individual that attempts to 'invest' in these markets is deluded for they are in reality in a situation worse than casino gaming. At least in casino gaming the rules are not changed while the dice are in the air.

And, the math models of anyone are bs when central banks are running a command economy.

Wed, 11/02/2011 - 19:19 | 1839124 deebee
deebee's picture

Agree.  I think the focus of these problems is government & CB policy.

There would be no 'market hysteria' if government policy stopped ecouraging heavy risk taking and punishing saving. You can't blame capitalists for trying to chase profits. This is what leads to innovation but govt. needs to also set limits. Set limits too high & red tape discourages business investment (or moves it offshore).

Government is there to provide a framework, regulate, offer various services in return for the taxes we pay. What are the current policies doing for tax payers?

Wed, 11/02/2011 - 09:37 | 1836402 Hedgetard55
Hedgetard55's picture

Agree. This system worked well in the Soviet Union for seventy years until the CIA undermined Gorbachev and brought ruin, out of fear of competition. It also works very effectively in North Korea, Cuba and Venezuela.

Wed, 11/02/2011 - 10:18 | 1836531 Marley
Marley's picture

Good try MDB.  Krugman was right, there was a coup by the right under Bush.  "Corporations will be persons when one gets executed in Texas." 

Wed, 11/02/2011 - 10:33 | 1836587 sschu
sschu's picture

MDB, save all these quotes and write a book.  Larry Summers or Christina Romer might hire you as a spoke-person or research assistant.  :-)

It would not be so funny if not so true.

sschu

Wed, 11/02/2011 - 09:01 | 1836270 AE911Truth
AE911Truth's picture

0. Stop using debt as money. Stop working to pay interest to bankers on money they create out of thin air. This is the worlds greatest scam. Stop already.

Use debt free interest free money issued by the state for transactions and as a unit of account, and payment of debt. Use precious metals to preserve wealth.

http://tiny.cc/1mr5v

http://s6.zetaboards.com/Bill_Still_Reforum/forum/56153/

 

Wed, 11/02/2011 - 17:20 | 1838703 doggings
Wed, 11/02/2011 - 09:23 | 1836340 RSDallas
RSDallas's picture

Million,

The problem with your suggestions lie in the definition of "force".

Wed, 11/02/2011 - 11:20 | 1836863 Bagbalm
Bagbalm's picture

" ~sort out this economy once and for all."

Yes that will just end all cyclic economic variation. (sarcasm) You sir, are a fool. I am simply a high school graduate, a machinist and a plumber, and even I can tell you are a fool who knows nothing of history or human nature.

I'm surprised you didn't demand wage and price controls and interest rates set by decree. I can only HOPE you are a paid shill and don't really believe this crap.

Wed, 11/02/2011 - 11:27 | 1836915 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

whats scary is take this out of zero hedge world and a lot of people wouldn't see any irony in the post an would, indeed, be nodding their head quite seriously...

Wed, 11/02/2011 - 11:51 | 1837073 Spigot
Spigot's picture

Yeah, no shit. The world is lead by idiots, and the sheeple are idiots. Queue "Maximum Pain" on deck. You get what you buy into, and the buyin has been huge.

Wed, 11/02/2011 - 11:38 | 1836997 Spigot
Spigot's picture

Sorry, but your call for 'rational discussion' to 'arrive at solutions' is on its face (within the context of real markets) an acadmeic exercise with no value.

The reality is that the "Market" is already forcing real solutions to real problems, so watch and learn grasshopper. Reality is going to bite the world wide ass and take a very sizable chunk of butt flesh.

Discuss all you want. Krugman is a side show. But the fact that even now HE is talking doom in real time tells you something, doesn't it?

Talk of a "double dip recession" is like talking about "getting a little wet" when standing on the listing desk of the Titanic. Now he's talking about the potential of "massive bank runs"... hahaha! Dooooooommm!

Welcome to the Doom Club, Paul. When you start telling your fans about gold as a worthwhile investment I will be there for them, to sell at $5000 per ounce! (LOL)

 

Wed, 11/02/2011 - 12:40 | 1837321 cranky-old-geezer
cranky-old-geezer's picture

 

 

You won't be getting any million dollar bonuses with those views.

Wed, 11/02/2011 - 12:53 | 1837402 Shvanztanz
Shvanztanz's picture

5. Ban profits of all kinds. If you made a profit, you are greedy, so there will be no profits.

6. All proceeds from all sales will be turned over directly to the government, so it will have the funds necessary to give everyone health care, protection from terrorists and perfect complacency.

7. Ban the existence of droughts, floods, earth quakes, disease and discontentment and anything which will interfere with GDP.

8. Paychecks will be delivered prior to work, invoices will be received prior to receipt of goods or services, work pace will be determined by the workers. 

9. Holders of notional college degrees like 18th Century French Poetry, the History of East Germany, Pop Music Culture, etc. will no longer be discriminated against for technical jobs like doctors, dentists, engineers, pilots, etc. All people will have guaranteed jobs of their choice, with infinite salaries (%101 payable in tax to govt.) and no minimum performance standards.

10. Goatees will be mandatory for all men, with unkempt beards preferred, females will have braids and non-shape-fitting clothes. 

11. Hygiene will be optional, though discouraged.

12. The government will prohibit pipes from clogging, machines from wearing out, electricity from going out and mud from accumulating after periods of rain.

13. One corporation will be sacrificed on the White House Lawn, Apocalypto style, on live TV, each week before Monday night football.

14. Professional sports will no longer be restricted to the best athletes, and will select players on a lottery basis. 

15. All inequities of any kind will be banned. A committee will convene to determine the best ways to eliminate inequities. and eliminate the differences between the best ways and the worst ways.

16. Every tuesday the sun will dim just enough for a happy face to be projected on it by an anti-matter projection-mabob, which will need to be created by a corporation at their own expense.

Wed, 11/02/2011 - 13:14 | 1837501 24KGOLD FOIL HAT
24KGOLD FOIL HAT's picture

You are very ingenius with social justice planning.  I hope Occupied [marxist chumps] dont see this list.  Then they might have some focus other than "no budget cuts."

Occupied's plans are for a constitutional convention in july 2012.  When I asked em what changes they will plan, they said no changes; just an entirely new constitution.

Occupy is sincere at the ground level but tea party is realistic.

Wed, 11/02/2011 - 18:54 | 1839024 deebee
deebee's picture

The seriousness of America's problems is only amplified when Nobel Prize winning 'economists' fail to see the most obvious or 'common sense' issues: the biggest credit-fuelled bubble in history.

And rather than offer a sensible solution, Krugman believes the cause of the problem is that government doesn't spend/stimulate enough(!) despite his depth of crisis studies and the blatant failure of the Japanese QE program.

I suggest people read his book, The Return of Depression Economics [don't worry, it won't take long] if you haven't already & pay particular attention to his pathetic conclusion*. This is all he has to offer.

Also, Krugman's been very bearish for years before the crisis but for the wrong reasons.

* Then read something sensible like Peter Schiff, Jim Rogers, Steve Keen, Bud Conrad, Harry Potter...

Wed, 11/02/2011 - 20:50 | 1839419 tmftdoyle
tmftdoyle's picture

hey million dollar bonus;

 

tired of the childish discourse! well here is some adult advice. wake the f-ck up you moron.

Wed, 11/02/2011 - 10:56 | 1836716 mtomato2
mtomato2's picture

Is it me, or does ZH sort of cherry-pick the Krugman they like from the Krugman they don't like?

Wed, 11/02/2011 - 22:00 | 1839602 mtomato2
mtomato2's picture

...How this comment earned me two thumbs down is completely beyond me.

Wed, 11/02/2011 - 08:36 | 1836182 Smiddywesson
Smiddywesson's picture

Indecisive????

Central banks, all over the world, all at the same time, are bailing out their cronnies and stalling while they buy gold for the first time in decades.  I don't call that indecisive. 

Some people still think that the system can be saved with stimulus.  Possibly you are one of them, eh?

Wed, 11/02/2011 - 08:44 | 1836201 Popo
Popo's picture

"Doctor" Paul Krugman is also a Keynesian who advocates bank bailouts and infinite rounds of stimulus.  

He is aggressively attempting to curry favor with his Princeton comrade, Ben Bernanke, because it's clear to everyone in the business that he wants an appointment at the Fed.

Krugman is a hack.   You should have seen the criticisms within economics academia when he won the Nobel.   (He won it for hating Bush, not for anything remotely remarkable in his economics writing.   Like Obama's Nobel Prize, Krugman's was given purely for political reasons -- and marks yet another embarrassment for the Nobel committee).

 

 

Wed, 11/02/2011 - 08:47 | 1836213 Smiddywesson
Smiddywesson's picture

Absolutely friggin spot on.  The Nobel Committee is no longer relevant.  They have squandered all of their legitimacy.

Wed, 11/02/2011 - 08:57 | 1836257 Kat
Kat's picture

Just because our very own Nobel Peace Prize winning president went to war in Libya and killed bin Laden and QaDaffy in the space of less than a year does NOT mean....oh...I see what you mean.

 

Actually, Krugman won his nobel prize for some good economic work on free trade.  But, that was back when he was an economist and not a political hack.

Wed, 11/02/2011 - 09:05 | 1836286 MillionDollarBonus_
MillionDollarBonus_'s picture

You are only saying that because you are jealous that virtually no Austrian economists have won the prestigious Nobel prize. Take a look at REPEC's 50 BEST economists in the world:

http://ideas.repec.org/top/top.person.all.html

How many Austrian economists do you see on that lists? How many Keynesian economists do you see? I rest my case.

Wed, 11/02/2011 - 09:13 | 1836318 Iam_Silverman
Iam_Silverman's picture

"How many Austrian economists do you see on that lists?"

As you say - virtually none.  But that is just self-preservation on their part.  Those Austrians would argue that the money spent to sustain those clowns (Nobel board of high-fallutin' knowitalls) may be better spent in the open market - perhaps in building a base of PM's to bolster the value of fiat money?

Wed, 11/02/2011 - 09:28 | 1836357 Sean7k
Sean7k's picture

I realize you are just being sarcastic, but the list requires that you register for it. Austrian economists would never bother. They realize that economics is not a popularity contest. Funny though...

Wed, 11/02/2011 - 09:38 | 1836408 sdmjake
sdmjake's picture

MDB isn't being sarcastic. Worst troll since Harry/HamyWanger with none of the laughs. Makes Robo look like a genius. Put him on your silly list...

Wed, 11/02/2011 - 10:03 | 1836481 boiltherich
boiltherich's picture

I would think that the Nobel economics committee as well as Krugman himself would simply open their eyes and for one day try to be objective rather than reactionary and look at the total mess Keynesian economics has created in this world.  But they cannot do that because if they did they would see that dislocations caused by their brand of voodoo economics is killing people on the poorer fringes of the worlds populations, as well as wiping out wealth and security for virtually the rest, and setting the stage for yet another and perhaps the last great war over resources.  Because of this they will defend their agenda to the very last moment and never admit they had any part in the genocide of the less wealthy. 

I used to think a lot like MDB in defending Krugman some 12 years ago or so, it was easier when Clinton was in office and we had surplus budgets, even if they were surplus only by the taking of the SS trust fund, at least we were on the road to real surplus and we had full employment, as well as the peak of our standards of living.  Any theory be it Keynesian, Austrian, communist manifesto, or other can deliver general well being and prosperity IN THEORY, I mean who would back a theory that promised shortages, inequality, war, and misery?  But the problem is that theory meet real world, real world meet theory. 

None will work unless you can take out the effects of the greed of the worst among us, fiat is the perfect vehicle for theft, debasement, manipulation, inequality, and every other problem we now have.  It is a system that can't be fixed, it is inherently unjust. 

If Dr. K and the Nobel judges were all driving cars way too fast on a slippery road and all smashed into each other and crunched up the vehicles and were all wounded, upon surveying the carnage they would all say it was someone else's fault, the road engineer should have made the crown higher, the guard rails were defective, and most loudly they would all agree that the government should have spent more on paving materials.  But they will never admit that it might have had something to do with their lack of piloting skills. 

Wed, 11/02/2011 - 10:05 | 1836492 TruthInSunshine
TruthInSunshine's picture

If Mr. K and the Nobel judges were all driving cars way too fast on a slippery road and all smashed into each other and crunched up the vehicles and were all wounded, upon surveying the carnage they would all say it was someone else's fault, the road engineer should have made the crown higher, the guard rails were defective, and most loudly they would all agree that the government should have spent more on paving materials.  But they will never admit that it might have had something to do with their lack of piloting skills.

They would most likely call this an externality that could have been prevented via the use of a multiple-level tax on road [civil] engineers, the manufacturer of the guard rails & the manufacturer and installer of the paving materials.

Wed, 11/02/2011 - 11:04 | 1836758 mojine
mojine's picture

Barack O-fuckin'-Bama "won" one of those prizes, too. I rest my case! Half-wit!

Wed, 11/02/2011 - 08:54 | 1836237 Catch-22
Catch-22's picture

100% accuracy once again Popo... quite the marksman!  

Wed, 11/02/2011 - 09:32 | 1836382 DavosSherman
DavosSherman's picture

"Dr. Paul Krugman" FUCK YOU!  The guy is a fucking moron!

Wed, 11/02/2011 - 08:17 | 1836140 ratso
ratso's picture

Paul Krugman is just refining his version of "I can predict a worse world disaster scenario than you can" for this competition that is open to leading economists.  He's way behind.

Wed, 11/02/2011 - 09:10 | 1836308 bernorange
bernorange's picture

He is preparing the stage for (political support for) massive central bank intervention to "rescue" the world.  He is a tool in the literal sense of the word.  Caveat emptor.

www.pmbug.com

Wed, 11/02/2011 - 10:29 | 1836569 GeezerGeek
GeezerGeek's picture

Perhaps Krugman is trying to show that he learned something in an English Lit class. He certainly learned nothing of value in any of his Econ classes.

What I am referring to, of course, is his quote "things are falling apart in Europe; the center is not holding." Is he channeling the poem by William Butler Yeats titled "The Second Coming"? http://www.potw.org/archive/potw351.html. The proper quote from this poem would be "the center cannot hold". A more complete segment of the poem is this: "Things fall apart, the center cannot hold, Mere anarchy is loosed upon the world,"

Yeats was writing about the great upheavals sweeping Europe at about the time of World War I. Certainly the line sounds applicable to the financial situation today, with the financial institutions perhaps going the way of the European monarchies nearly a century ago. Perhaps Krugman sees the central banks as representing the "center" and those opposing the CBs as the revolutionaries. Changing the text a bit, if that is what he did, would have allowed Krugman to avoid having to attribute the text/thought to someone else. Sort of like "spreading the literary credit around".

Another alternative is that he saw the book by Elyn Saks titled "The Center Cannot Hold: My Journey Through Madness" and took the title's theme as his own, the specific madness being Keynesianism.

Or maybe he just came up with the phrase on his own.

Wed, 11/02/2011 - 08:20 | 1836148 johngaltfla
johngaltfla's picture

If Krugman were to replace "Lira" with "new dollar" he would describe the coming situation in the U.S. to perfection.

That is why gold is the only safe play along with lead, food, farmland, and if you can swing it, a Bradley isn't a bad addition to the driveway.

Wed, 11/02/2011 - 09:39 | 1836411 WALLST8MY8BALL
WALLST8MY8BALL's picture

ManBernKrug - Half man - Half Psychotic Bearded Keneysian Fool!

Do NOT follow this link or you will be banned from the site!