Krugman: What a dick. Smart, but a dick

Krugman: The Return of Depression Economics and Crying

Paul Krugman’s newest book, The Return of Depression Economics and the Crisis of 2008 offers historical accounts of previous 20th century international economic crises as well as a breakdown of the rudimentary causes of the current global financial crisis. While his breakdown of these calamities is wonderfully orated through language more in tune with the economic layman such as a wonderfully picturesque and simple baby-sitting cooperative model, in the end he offers no very specific cures for the current crisis.
The historical perspective offered on the previous financial crises is extensive, covering the Latin American, Japanese and Asian economic crashes of the 1990’s. The similarities between all of these crises and the current economic situation are readily apparent, whether it be the inability of current American monetary policy to make any significant dent in the recession much like the Japanese were unable to do in the 1990’s or the arrival of a currency crisis similar to the one that plagued Argentina in 2002. However apparent these may be, the pontifical manner in which Krugman continues to state that indicator signs were “generally ignored” gives this book a patronizing feel.
His arguments for the initial causes of the incident are the most relevant to understanding the current financial crisis, for without knowledge of the problem a solution cannot be reached. Krugman’s analysis that there are four distinct causes of the current crisis appears to be accurate. The bursting of the overvalued housing market, the lack of regulation in the shadow banking industry that led to 21st century bank runs, a monumental currency crisis and the lack of the Federal Reserve Bank to gain any hold on the recession through monetary policy all appear to be sound explanations for the current economic slump. However, the remedies for each of these problems that he offers are not only flawed in themselves to an extent, but also unrealistic.
Krugman’s main idea for an economic revival basically comes down to support for a massive bailout. However, the roughly $800 million dollar bailout that was the brainchild of the Obama administration appears to be not drastic enough for Krugman, as he would like a capital infusion more along the lines of $2 trillion dollars. In this book, he comments on the prevalence of economic corruption that can occur with government economic involvement, but apparently he believes that the United States is a corruption free zone. Naïve, to say the least. In addition to his stimulus endorsement, Krugman wants stringent fiscal regulations imposed on the shadow banking industry. What is already apparent to the observant is that the shadow banking industry is dead, and that regulation on the remaining shadow banks would kill they rest of them, as it would drive down profit margins. With firm regulations in place, an entire sector for economic growth would die.
Ultimately, Krugman gives every indication of being a pompous wretch, viewing himself as a beacon of intellectual light that was ignored. Rather than simply offering solutions to the current problem (he spends only 7 ½ pages on this in a 191 page book) he wags his proverbial finger at the economic elites that have in his mind contributed to this crisis, all the while claiming, “I told you so”.