Op-Ed Columnist - Paul Krugman - Decade at Bernie’s - NYTimes.com
It isn't often I find something to agree about with Krugman, but I think he is right about the "illusion of wealth", he is just really wrong about the time period.
First of all, in this world, wealth is ALWAYS an illusion -- that has been known since the Bible came out. Is it a special illusion "the last 10 years"? Maybe, but he has the trend right -- wealth has been even ore illusionary than normal since FDR signed FICA into law. That is when we as a people started signing up for belief in a false Ponzi scheme that makes Madoff look as honest as Abe Lincoln. We has a nation have been on the path of taking money now and transferring debt to future generations since we bought into that scheme.
Once we are all in a "group scheme", the little schemes just pile on. Sub-prime loans and Fannie and Freddie are another example -- if the Government is PUSHING and taking part in serious mortgauge irregularities and "wink, wink, nod, nod" insuring them, well, then why not have some other folks making even MORE money off "the deal"??
Golly, who was President in the '80s? I bet it wasn't someone that Krugman liked, but at least savings (and most everything else) was better than. What Krugman doesn't quote is that the home credit binge took off from '90 - 2007 ... $2.5 Tillion in '90 to $10.5 Trillion in credit backed by homes by 2007.
So Krugman finally decides that unless we have another WWII level of spending, it will be a "long painful slump". Lovely -- Krugman hates the idea that conservatives are optimistic when Republicans are in power, but I guess the fact is that the left is ALWAYS pessimistic, even when all their folks are pulling the levers!
It isn't often I find something to agree about with Krugman, but I think he is right about the "illusion of wealth", he is just really wrong about the time period.
First of all, in this world, wealth is ALWAYS an illusion -- that has been known since the Bible came out. Is it a special illusion "the last 10 years"? Maybe, but he has the trend right -- wealth has been even ore illusionary than normal since FDR signed FICA into law. That is when we as a people started signing up for belief in a false Ponzi scheme that makes Madoff look as honest as Abe Lincoln. We has a nation have been on the path of taking money now and transferring debt to future generations since we bought into that scheme.
Once we are all in a "group scheme", the little schemes just pile on. Sub-prime loans and Fannie and Freddie are another example -- if the Government is PUSHING and taking part in serious mortgauge irregularities and "wink, wink, nod, nod" insuring them, well, then why not have some other folks making even MORE money off "the deal"??
At one level this should come as no surprise. For most of the last
decade America was a nation of borrowers and spenders, not savers. The
personal savings rate dropped from 9 percent in the 1980s to 5 percent
in the 1990s, to just 0.6 percent from 2005 to 2007, and household debt
grew much faster than personal income. Why should we have expected our
net worth to go up?
Golly, who was President in the '80s? I bet it wasn't someone that Krugman liked, but at least savings (and most everything else) was better than. What Krugman doesn't quote is that the home credit binge took off from '90 - 2007 ... $2.5 Tillion in '90 to $10.5 Trillion in credit backed by homes by 2007.
So Krugman finally decides that unless we have another WWII level of spending, it will be a "long painful slump". Lovely -- Krugman hates the idea that conservatives are optimistic when Republicans are in power, but I guess the fact is that the left is ALWAYS pessimistic, even when all their folks are pulling the levers!
Since nothing like that is on the table, or seems likely to get on the
table any time soon, it will take years for families and firms to work
off the debt they ran up so blithely. The odds are that the legacy of
our time of illusion — our decade at Bernie’s — will be a long, painful
slump.
No comments:
Post a Comment