Paul Krugman: Rabbit-Hole Economics

[cal04]

http://www.nytimes.com/2011/10/14/opinion/rabbit-hole-economics.html?_r=1&smid=tw-NytimesKrugman&seid=auto

Reading the transcript of Tuesday’s Republican debate on the economy is, for anyone who has actually been following economic events these past few years, like falling down a rabbit hole. Suddenly, you find yourself in a fantasy world where nothing looks or behaves the way it does in real life.

And since economic policy has to deal with the world we live in, not the fantasy world of the G.O.P.’s imagination, the prospect that one of these people may well be our next president is, frankly, terrifying.

In the real world, recent events were a devastating refutation of the free-market orthodoxy that has ruled American politics these past three decades. Above all, the long crusade against financial regulation, the successful effort to unravel the prudential rules established after the Great Depression on the grounds that they were unnecessary, ended up demonstrating — at immense cost to the nation — that those rules were necessary, after all.

But down the rabbit hole, none of that happened. We didn’t find ourselves in a crisis because of runaway private lenders like Countrywide Financial. We didn’t find ourselves in a crisis because Wall Street pretended that slicing, dicing and rearranging bad loans could somehow create AAA assets — and private rating agencies played along. We didn’t find ourselves in a crisis because “shadow banks” like Lehman Brothers exploited gaps in financial regulation to create bank-type threats to the financial system without being subject to bank-type limits on risk-taking.

[Electric Monk]

1. K&R

&U&G&M&A&N

[Demeter]

2. That's so cute!

and a nice tribute to a man whose job is trying to cast pearls before swine without getting stomped on.

[Motown_Johnny]

3. I'm still calling it Voodoo Economics, but I have begun to think maybe it did work

since all conservatives are now mindless zombies

[unblock]

4. krugman's mistake is thinking of republican's agenda as backed by some economic theory.

it's not, unless you consider "all your money are belong to us" an economic theory.

truth of the matter is that the republican agenda is naked greed, and any thing they claim to justify it is merely a rationalization for naked greed.

republican leaders don't give a damn about what's good for the country as a whole, they want to enrich themselves and their already rich sponsors. they'll do anything and say anything and choose only on the basis of what's politically effective at the moment.

they couch their propaganda in economic terms and pretend it's a valid theory only because it works POLITICALLY, convincing many people to ignore common sense and reality and defer to the paid "experts" at biased think tanks.