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Author Topic: Krugman wins the Economics Nobel  (Read 1444 times)

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LosingNow

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Krugman wins the Economics Nobel
« on: October 13, 2008, 02:25:51 PM »

wow!
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prfsr

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Re: Krugman wins the Economics Nobel
« Reply #1 on: October 13, 2008, 02:32:30 PM »

wow!

I think the Nobel commitee reads this DG and saw the many Krugman articles I posted  ;D

Seriously,  :notworthy: :notworthy:  :icon_thumleft: :icon_thumleft:
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keep-it-cool

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Re: Krugman wins the Economics Nobel
« Reply #2 on: October 13, 2008, 02:37:49 PM »

Well deserved .. from whatever I have read of him so far.

On a different note, has anyone read Snowball yet?
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WicketView

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Re: Krugman wins the Economics Nobel
« Reply #3 on: October 14, 2008, 03:49:31 AM »

Oh wow. I did not realize that he had such a standing!
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proloy

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Re: Krugman wins the Economics Nobel
« Reply #4 on: October 14, 2008, 05:13:01 AM »

I'm not too sure whether he got his Nobel for his economics or for his being a critic of Bush. Lately a lot of political overtones have got added to such things -- like one of the previous year's Nobel Peace Prize going to an Iranian. It looks to me to be indicative of which way the wind is blowing than anything else.

One thing I've to say: I've seen his articles for the last several years. His columns used to be reprinted in either the TOI or the Hindu, I forgot which. But I always had a hard time understanding what he had to say -- so over a period of time I stopped reading them. Even his columns in the nytimes, I barely ever manage to finish reading. It just looks to me that the guy knows nothing other than cribbing, and completely lacks a sense of humor.

I never for once suspected that he was an economist till I saw the other day that he got a nomination. I always thought he was a journalist/commentator. I thoroughly enjoy Friedman's writing, and though the two of them usually speak in the same voice, I've always found Krugman extremely dense.

Btw, our own Jagadish Bhagwati too was in the running, for the tenth time or so. (He seems to have become a Dinesh Mongia of sorts. Doesn't know what more he has to do to make the cut, although his name is always "discussed"!)
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pieterSAN

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Re: Krugman wins the Economics Nobel
« Reply #5 on: October 14, 2008, 12:50:07 PM »

I met Krugman as a graduate student. There was an interesting debate back then on the subject of the Chinese holding so much American debt.

Here is something he presented at the IgNoble Prize Ceremony....

Heisenberg Certainty Lecture #4.
Paul Krugman, Professor of Economics, MIT.
"The MIT Economics Department has now solved the riddle of
world economic crisis. It turns out that if you add up last
year's reported imports and exports for all of the countries
in the world, world imports exceeded world exports by more
than one hundred billion dollars. You know what that means.
It means that we are running a huge global deficit in our
interplanetary trade. So Ross Perot has it wrong. That great
sucking sound isn't coming from Mexico -- it's coming from
outer space. Space aliens are stealing American jobs."
« Last Edit: October 14, 2008, 12:52:43 PM by pieterSAN »
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prfsr

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Re: Krugman wins the Economics Nobel
« Reply #6 on: October 14, 2008, 01:06:15 PM »

The latest op-ed column from the good man.

http://www.nytimes.com/2008/10/13/opinion/13krugman.html?em

Gordon Does Good
 
By PAUL KRUGMAN
Published: October 12, 2008
Has Gordon Brown, the British prime minister, saved the world financial system?
 

O.K., the question is premature — we still don’t know the exact shape of the planned financial rescues in Europe or for that matter the United States, let alone whether they’ll really work. What we do know, however, is that Mr. Brown and Alistair Darling, the chancellor of the Exchequer (equivalent to our Treasury secretary), have defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up.

This is an unexpected turn of events. The British government is, after all, very much a junior partner when it comes to world economic affairs. It’s true that London is one of the world’s great financial centers, but the British economy is far smaller than the U.S. economy, and the Bank of England doesn’t have anything like the influence either of the Federal Reserve or of the European Central Bank. So you don’t expect to see Britain playing a leadership role.

But the Brown government has shown itself willing to think clearly about the financial crisis, and act quickly on its conclusions. And this combination of clarity and decisiveness hasn’t been matched by any other Western government, least of all our own.

What is the nature of the crisis? The details can be insanely complex, but the basics are fairly simple. The bursting of the housing bubble has led to large losses for anyone who bought assets backed by mortgage payments; these losses have left many financial institutions with too much debt and too little capital to provide the credit the economy needs; troubled financial institutions have tried to meet their debts and increase their capital by selling assets, but this has driven asset prices down, reducing their capital even further.

What can be done to stem the crisis? Aid to homeowners, though desirable, can’t prevent large losses on bad loans, and in any case will take effect too slowly to help in the current panic. The natural thing to do, then — and the solution adopted in many previous financial crises — is to deal with the problem of inadequate financial capital by having governments provide financial institutions with more capital in return for a share of ownership.

This sort of temporary part-nationalization, which is often referred to as an “equity injection,” is the crisis solution advocated by many economists — and sources told The Times that it was also the solution privately favored by Ben Bernanke, the Federal Reserve chairman.

But when Henry Paulson, the U.S. Treasury secretary, announced his plan for a $700 billion financial bailout, he rejected this obvious path, saying, “That’s what you do when you have failure.” Instead, he called for government purchases of toxic mortgage-backed securities, based on the theory that ... actually, it never was clear what his theory was.

Meanwhile, the British government went straight to the heart of the problem — and moved to address it with stunning speed. On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement.

At a special European summit meeting on Sunday, the major economies of continental Europe in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts. And whaddya know, Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities (although he still seems to be moving with painful slowness).

As I said, we still don’t know whether these moves will work. But policy is, finally, being driven by a clear view of what needs to be done. Which raises the question, why did that clear view have to come from London rather than Washington?

It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as “private good, public bad,” which must have made it hard to face up to the need for partial government ownership of the financial sector.

I also wonder how much the Femafication of government under President Bush contributed to Mr. Paulson’s fumble. All across the executive branch, knowledgeable professionals have been driven out; there may not have been anyone left at Treasury with the stature and background to tell Mr. Paulson that he wasn’t making sense.

Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.
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