Volatility

June 28, 2010

Krugman Watch June 28 (Sarajevo Day)

Filed under: Corporatism, Globalization, Health Racket Bailout — Tags: , — Russ @ 6:27 am

 

The significance of Paul Krugman is that he’s the most prestigious of the corporate liberal hacks. This is on account of what the general quasi-educated readership believes to be his great intellectual accomplishments. (Burnished by his alleged Nobel Prize; but in fact the economics Prize is really a pseudo-prize which was fabricated in the 70s for precisely this purpose, to bestow fraudulent authority upon neoclassical economists; and by now all nobble prices are fraudulent anyway, as proven by their giving the “peace” prize to a war criminal. This was intended to encourage and whitewash further war.)
 
It’s also because of Krugman’s excellent record of opposition to Bush and the Republicans. He was so cogent and often eloquent in his attacks on Bush that many people who don’t know the history or forgot it believe he opposed Bush policies as opposed to supporting the policies but attacking as a partisan Democrat. And what about those who remembered the real Krugman from the 90s?
 
The globalization hawk who wrote “in praise of cheap labor” (the same piece where he lasciviously indulged his fantasy of people having to literally live in toxic waste dumps and proclaimed that working at McDonald’s should be the normative job condition; of course he claimed to seek improvements on this, but actions and results are always the proof, never bogus caveats) and proclaimed his vision of utopia:
 

A highway interchange, a parking lot filled with cars, a traffic jam, suburban tract housing, an apartment building with numerous satellite dishes, an office with many computer screens, office workers on a busy street, high-rise office buildings, a “factory farm” with many chickens, a supermarket aisle, a McDonald’s arch.

 
Many who remembered this thought Bush had made him see the error of his ways and that he repented. I too thought it might be possible.
 
Of course we know today that the New Progressive Krugman is the same old neoliberal Thugman. Since Obama came in Krugman has done five things:
 
1. He has supported the Bailout and supports its perpetuation forever.
 
2. In particular, he was lead propagandist floating the scam of Swedish-style nationalization. needless to say the kleptocracy would never have taken big banks into receivership and either liquidated them or nursed them back to health, either way on terms favorable to the people. (And of course even real Swedishism would still never work outside Sweden. Here the rackets are too existentially thuggish and even if resolved and reinstated on a Swedish basis would quickly go back to their old crimes. It really didn’t work even in Sweden, as we see from the Swedish banks’ Baltic depredations. No, you can never “resolve” or temporarily “nationalize” private bank rackets. They have to be absolutely eradicated.)
 
The system never wanted to do anything like this, but Krugman was there as ringleader of the idea, just in case Obama felt politically pressed enough that he had to pretend to do it.
 
Of course it would only have been a pretense. Just as in practice Bagehot’s rule (lend freely, only to solvent banks at penalty rates on good collateral) was transformed to “give freely to insolvent banks at near-zero rates on no collateral at all”, so in Obama and Geithner’s hands “nationalization” would have been just a pure unloading of all toxic assets off the balance sheets and onto the public, at which point the banks would have gotten off scot free.
 
That was Krugman’s notion of the ideal Bailout.
 
3. He was lead agitator among the “educated liberals” on behalf of the health racket bailout. He knows this is a vicious reactionary assault and simply systematically lied about it, out of his corporatist ideology and Democrat partisanship.
 
Read here for what the Bush-era Krugman thought about health reform and about possible political scams the Republicans might try. How strange, that he flipped 180 degrees on both the policy and the tactics as soon as a Democrat came back in.
 
4. Simpatico with administration rhetoric, he’s tried to play astroturfer on the China currency manipulation issue. The goal of Obama, Geithner, and Krugman is good old misdirection by xenophobia. Demonize the (non-white) foreigner. It’s the Yellow Peril again.
 
The truth is that the US and Chinese kleptocracies together comprise the Chimerica entity, which wages war on the peoples of both America and China. The US gangsters want the American people to blame this vague but menacing nebula, “China”, for what are actually US system crimes. The same dynamic occurs in China.
 
Just as the real business of the Chinese people is to get rid of the Chinese gangs, so the real business of the American people is to get rid of the home-grown US rackets. Propaganda criminals like Krugman want to distract us from our interests. We mustn’t let them.
 
5. Krugman now supports the war. Now that Obama has taken full personal ownership of the war, and did so with great glee and gusto, now that it’s a Democrat war, Thugman supports it.
 
But he doesn’t say so. He, who wrote so often and with such passion on this allegedly non-economic issue during Bush (of course it really is a fully economic issue), has suddenly gone suspiciously silent. Suddenly he implicitly agrees with all the critics who whined during the Bush years that he shouldn’t be writing about war or anything other than straight economic topics. 
 
That’s because he wants to keep basking in the reputational nimbus of his anti-war heroism. He thinks if he had to join in with all the other liberal hacks who have been reborn as jingos, it would harm his brand and impair his effectiveness as an economic hack astroturfer. So now he keeps his mouth shut.
 
 
So that lays bare the real Thugman agenda. But lately his main preoccupation has been an internecine squabble over the timing of “austerity”. I wrote about this before, describing how where it comes to “austerity” Krugman objects to the timing of a particular class war tactic, but does not object to the class war assault as such, and that’s why he argues the way he does, refusing call austerity by its rightful name, robbery, and refusing to call his colleagues in crime “class warriors”, because he actually agrees with them on principle and strategy and only disagrees on tactical tempo. Today I wanted to revisit and refine the message, as well as place it within the real Krugman Context.
 
In today’s column Krugman again affirms his overall support for the Permanent Bailout:
 

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

 
It looks like we’re even making some progress in forcing some marginal honesty out of his rhetoric. Where before he would fraudulently blame Republicans for Democratic actions where the Dems had total licence to do whatever they wanted and therefore by definition did do whatever they wanted, today he says:
 

The Obama administration understands the dangers of premature fiscal austerity — but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

 
This is still a lie. The Reps still have zero power to do anything the Dems don’t let them do, and the agenda here is being driven not by alleged “conservative” Dems but by the Dems period. What he’s calling conservative is the Dem establishment mainstream, as well as what the alleged “progressive” Dems agree to every time.
 
So existentially there’s no such thing as relative “conservatives” among the Democrats, while “progressives” are nonexistent in both relative and absolute terms. There are simply the Democrats as such, who economically and in war are a right wing conservative party in an absolute sense.
 
The recap of this column, as a Krugman update, is simple.
 
1. He still credits “invisible bond vigilantes” as representing a real motivation, albeit a wrongheaded one.
 

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

 
 
He still refuses to speak the truth:
 
Austerity is robbery.
 
Those who advocate austerity are robbers.
 
Any excuse like “invisible bond vigilantes” is nothing but a pretext to try to justify robbery.
 
But they really want austerity for its own sake because they want to continue robbing.
 
2. Thugman doesn’t object to the robbery as such. That’s proven by his support for the Bailout as such, as well as such crimes as his astroturfing for the health racket bailout.
 
3. It’s just that in this case he thinks it’s tactically premature for the US as well as trade surplus countries to undergo the austerity stripping. The column basically says as much. To requote:
 

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

 
The Bailout plus the hijacked Obama stimulus = Krugman’s idea of the correct looting policy for now. He thinks the Bailout stage still has further legs.
 
(Here’s a broader analysis of Krugman’s looter ideology, his place as neoclassical synthesist.
 

The reality of the Great Depression convinced many economists and business observers in the late 1930s that Keynes was right, and led to widespread references to the “Keynesian revolution.” Keynes’s proposals related to stimulating effective demand through civilian government spending were not directly applied in the 1930s, however, and it was the Second World War that lifted the United States and other advanced capitalist economies out of the Great Depression. After the war, Keynes’s analysis was debased by such figures as Paul Samuelson at MIT, leading to what was sometimes called the “neoclassical-Keynesian synthesis,” or more frequently the “neoclassical synthesis.” In what Keynes’s younger colleague, Joan Robinson, famously dubbed “bastard Keynesianism,” Keynes’s more revolutionary insights were all excluded and his analysis was reincorporated with the neoclassical theory in a subordinate form.9 Mainstream economists came to the conclusion that the capitalist economy could be effectively managed by monetary and fiscal policy fine tuning, with an emphasis on the former. This was because the economy was once again implicitly assumed to act in accordance with Say’s Law, moving naturally toward a full-employment equilibrium, now redefined as a “natural rate of unemployment.” Neoliberal globalization, deregulation, the removal of all restrictions on the movement of capital, the creation of sophisticated new financial architectures, were seen as constituting the essence of all economic logic on a world scale.

Hence, by the 1970s (and even more so after the stagflation crisis of that decade) Keynes had been relegated to a “special case theory of Depression economics,” applicable only when monetary policy could no longer be effectively used to boost the economy.10 But such a condition was no longer believed to be relevant, since, as University of Chicago economist Robert Lucas declared in 2003 in his presidential address to the American Economic Association, the problem of depression and even of the business cycle had essentially been solved. This view was reiterated in 2004 by Ben Bernanke, then a Federal Reserve Board governor, now chairman of the Federal Reserve Board. For Bernanke the Great Depression was no longer of theoretical interest; rather the problem to solve was the “Great Moderation,” i.e., the reduced volatility of the capitalist economy in the 1980s and ’90s. What needed investigating, he argued, were the reasons for the effective end of the business cycle, which he attributed to more sophisticated monetary policy, arising initially out of the insights of Milton Friedman’s monetarism.11

Today figures like Krugman are seen as partly challenging these conclusions, and as representing the return of Keynesian economics. But this is not a return to Keynes in the sense of his general theoretical critique of capitalism’s fundamental flaws. Rather it is a return to Keynesianism as a “special case” of “depression economics,” where monetary policy is ineffective and expansive fiscal policy needs to be given priority.12 The ascendancy of neoclassical economics, which bastardized and subordinated Keynes’s mildly critical view of capitalism, is not itself challenged. Nor is capitalism questioned. Rather it is assumed that mistakes were made in monetary policy and in regulatory systems that have pulled the economy back down into the “special case” of Keynesian “depression economics.”

Hence, what Keynes called the “outstanding faults” of the capitalist economy are hardly addressed as such.

 
He believes in Keynesianism, yes. But only in its corporatist looting form. Maybe at best he dreams that some of the bounty will trickle down. That’s definitely what he claims to believe.)
 
4. So while he objects to austerity in this context, he has to find grounds to do so which still obfuscate the fact that everything the system is doing, from globalization and financialization as such to lies like trickle-down to the Bailout to “austerity” and onward through the corporate nightmare, is ROBBERY.
 
Paul Krugman strives to whitewash this because he’s a trickle-down corporatist ideologue and Democrat partisan, both of which mean in practice he supports the worst economic crimes in history. It means he’s a hardened activist of kleptocracy, and he’s doing everything he can to serve it. 
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10 Comments

  1. Dude You are Tough but you are True!

    I’d only say that most often the evil that generates these pernicious decisions by an out-of-touch leadership caste is a banal evil.

    In other words, while there are a few consciously aware assholes who know fully the corruptness of their acts…

    Most of them actually believe their rationalizations and just don’t look to hard at reality.

    This doesn’t excuse it. In fact in some ways it makes it even more maddening and difficult to address. But nevertheless there it is…

    I have only one question…

    Where the heck do you get all the energy? I’m lucky if I can get off a few paragraphs a day and one blog post a month!!!

    Ahhhh… sweet youth.

    Comment by Tom Crowl — June 28, 2010 @ 11:45 am

  2. Thanks, Tom.

    I suppose you’re right about the subjective mindset of most of the criminals, although I don’t care much about it except in the practical know-your-enemy sense.

    But at this level of crime it makes zero moral difference.

    Where do I get my energy? I guess the state of things compels my passion, and if I didn’t organize it into ideas and then write them out I’d cannibalize myself one way or another.

    Comment by Russ — June 28, 2010 @ 2:50 pm

  3. Lots of excellent insight into Krugman, but I would like to question the word “robbery.” Yes, there is the transfer of public wealth to private hands. But it seems to go beyond that, towards a deliberate gutting of the economy so that public wealth will be even harder to come by in the future. It’s like armed robbery + aggravated assault + perjury + suborning perjury + tampering with witnesses + bribing the judges + false prosecution and arrest. What would be the word for that?

    Comment by emilio — June 28, 2010 @ 10:59 pm

  4. Emilio, you’re right, the English language seems insufficient to describe it.

    “Racketeering” seems to me the most apt broad term which can encompass all those crimes you listed. (I’d also deal with them as traitors and terrorists. What else can you call such deliberate, often gradual and systematic, economic attacks?)

    But for polemical purposes, “robbery” or “stealing” are often good handy terms.

    Comment by Russ — June 29, 2010 @ 2:49 am

  5. Krugman continues to confound and confuse me and otherwise drive me crazy; his last couple of blog posts I largely agree with.

    All of what you say is true (although you were really playing loose with his description of “utopia”) but he’s the most prominent critic of neoliberal economics at this time… which makes him a semi-useful idiot.

    YES, I agree that this most recent push against austerity is likely floating trial balloons for another stimulus package. But something like that is a good idea, even if Obama is only doing it for the midterms and Krugman’s only doing it to curry favor.

    I’m still divided about this guy.

    Comment by jimmy james — June 29, 2010 @ 10:30 am

    • He’s a (sometime) critic within the neoliberal corporatist system, which is pernicious like all other “reformism”, since it slows down the realization process among lots of people who could see the truth if they didn’t have the Krugmans there telling them the system’s basically OK and can be reformed.

      That’s the characteristic crime of liberals.

      And like I said, almost all his criticism comes when Republicans are in power or where he tries to blame Republicans for Democratic crimes. But it’s the same crimes; so it follows that he’s a gangster himself who simply favors his own gang.

      As for stimulus, that’s one of many ideas which could make sense if we lived in a human society, but which under this kleptocracy will only be hijacked to criminal ends.

      Just look at the first stimulus – it was the pretext for yet more tax cuts for the rich and corporations, while the spending was for corporate welfare like Cash for Clunkers and reactionary ratholes like more tax credits for housebuyers (trying to reflate the housing bubble).

      Under these conditions any stimulus would just be another veiled bailout which does nothing for the people.

      As for Krugman, any doubts anyone still had should have been dispelled by his acting as lead shill for the health racket bailout, whose mandate will be and is intended to be a vicious assault on the people.

      There’s no way Krugman’s so stupid that he could have believed the lies he was telling about any expectations that this bill will control costs or restrain predatory insurance racket behavior.

      We have to prepare for the worst, and when the worst comes, we should understand that liberal hacks like Krugman intentionally helped inflict it upon us.

      As for what I said about Krugman’s utopia, he recited that anti-globalist depiction of the nightmare world in order to affirm it himself. He was sticking up for it.

      Comment by Russ — June 29, 2010 @ 11:07 am

  6. Oh, he’s definitely a thug. And racketeering describes it all perfectly. Krugman is knee-capper for the kleptocracy. I look forward to the day when all of these assholes are served justice. And they will be put on trial and given justice. Either that, or they will live out there lives hiding on a deserted island somewhere.

    Comment by Bloodgroove — June 29, 2010 @ 7:54 pm

    • And on their island they could “assume a can opener”, as the joke goes. 🙂

      Comment by Russ — June 30, 2010 @ 1:29 am

  7. Russ,

    I like your stuff, but Krugman is not the enemy. 35 plus years of basic movement conservatism is the problem. Krugman is a human being just like the rest of us, and has made mistakes, but he is not evil incarnate, whereas I think many of the repukes are evil incarnate, especially Darth Cheney.

    And I think there are many worse things than Krugman for you to comment on. Like Obama and the corporatist blue dog democrats like Rahmbo. All bought and paid for.

    But Krugman is not a “free trader”, and was not an Obamatron supporter. And he makes more sense than Broder and the village idiots.

    Still generally like your stuff, but to try to make Krugman the bad guy, not so much.

    Comment by kcbill13 — June 30, 2010 @ 11:05 pm

    • It’s historically false to claim Krugman’s not a “free trader”. See the links above. Being a globalization thug is what he is and what he does.

      And today his main project is to support corporatist attacks on the people, whenever it’s Democrats perpetrating the crimes.

      Krugman’s main goal and main crime is to astroturf liberals in support of hard right economic policies. Not that the vile liberals ever need much encouragement to act as Republicans, but insofar as they do need “authority” for their treason, Krugman provides it.

      Sorry kcbill, but anyone who was a shilling leader for the health racket bailout and assault is my mortal enemy forever. That whole catastrophe is a defining event in my eyes. It lays out the real battle lines of tyranny and evil vs. humanity.

      Comment by Russ — July 1, 2010 @ 8:18 am


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