Paul Krugman and the WAR STIMULUS

"The war is indeed a grotesque waste of resources, which will place huge long-run burdens on the American public. But it's just wrong to blame the war for our current economic mess: in the short run, wartime spending actually stimulates the economy. Remember, the lowest unemployment rate America has experienced over the last half-century came at the height of the Vietnam War."

-Paul Krugman

The war is likely not the sole source of all our economic ills ... but if it's effect is so stimulative, why the hell are we in such a fix?

We've paid for the war with debt and cut taxes to be stimulative.  The taxes were supposed to stimulate the economy to a degree that tax revenues actually increase.  But no credible economist believes this to be true and it hasn't happened.  So, the deficit is fueled by both a shortfall in tax revenues to pay for traditional spending and borrowing to finance the war.  A double stimulus -- and we are still slipping into a recession?

Oil prices go up with uncertainty.  It's higher cost goes into about every good produced and delivered.  Some postulate that interest rates are pressured up by increased deficit spending although historical data fails to produce clear support.  But, uncertainty demands higher returns on investment -- i.e. higher interest rates.  Higher interest rates triggered the rate resets that started the mortgage collapse.  The mortgage market itself exploded in growth due to efforts to satisfy demand for high yield, quality debt (debt with less uncertainty) by "creatively" creating more of it.  A lot is explained by an uncertain world and the war that helped make it more so.

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NYT Krugman: Obama slightly Clueless

Paul Krugman, the distinguished, progressive economist, is not particularly impressed with Obama's handle on how the war has shaped our economy.

Krugman is one of the few NYT regulars whose brains have not been swept off to the wondrous land of Obaphoria.

I hope that one of you with more time than I, can use his fine article for the diary that it deserves.

http://www.nytimes.com/2008/03/24/opinio n/24krugman.html?_r=1&hp&oref=sl ogin

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Krugman Turns Lemonade into Lemons

This week, Krugman's Monday Obama piece takes on a slightly different tone than his previous efforts.  For months now, Krugman has devoted his Monday column to dissecting various policies espoused by Obama to assure us that Hillary Clinton was actually the better candidate.  He garners great respect in Progressive circles and so his columns provided a rich, if not unbiased, perspective on the differences between the Democratic candidates.

Apparently seeing the writing on the wall, Krugman forgoes a discussion of policy this week and instead warns that if Obama does not win the election and become the next FDR, "the recriminations could tear the party apart."

Krugman, it seems has concluded that if his candidate (Clinton) does not get the nomination, there is a real danger that the whole party could collapse.  Now if that is not an endorsement, I'm not sure what is.  Unfortunately, it has the ring of "sour grapes" and perhaps a certain stage of grief.  Nevertheless, it does suggest that Obama has won the nomination.

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RACE WAR! How Frank Rich PIMPS the Race Card for Obama

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I'm in Baltimore tonight visiting with the incomparable Daily Howler, Charm City's scourge of  media lies. He said it would be fine if I put up today's very important howler for discussion.

By the way, if you think I am using the word "pimp" to call Frank Rich a "Media Whore", you are right, I am."

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RACE WAR! How Frank Rich PIMPS the Race Card for Obama

Image and video hosting by TinyPic

I'm in Baltimore tonight visiting with the incomparable Daily Howler, Charm City's scourge of  media lies. He said it would be fine if I put up today's very important howler for discussion.

There's more...

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