Paul Krugman did correctly sound the alarm about the 2008 housing crisis — and he’s been right about inflation (so far!). But his review of his last decade’s hits and misses is something less than a ruthless self-inventory. Off the top of my head: He omits his argument that Timothy Geithners “stress tests” would not be enough to stabilize the financial system (an error he has admitted elsewhere) and his column declaring the V.A. health care system a “huge policy success.” …
Mickey Kaus
Kausfiles
The link to “review of his last decade’s hits and misses” goes to the 2011 column on the VA.
As to Krugman’s prescience on the housing bubble, yeah, yeah, everyone thought housing was too hot. But how many predicted a near-collapse of the global banking system?
This is still my favorite Krugman “prediction” on that score, from May 2006:
As I summarized it awhile back, we became a nation in which people make a living by selling one another houses, and they pay for the houses with money borrowed from China.
Now that game seems to be coming to an end. We’re going to have to find other ways to make a living — in particular, we’re going to have to start selling goods and services, not just I.O.U.’s, to the rest of the world, and/or replace imports with domestic production. And adjusting to that new way of making a living will take time.
Will we have that time? Ben Bernanke, the chairman of the Federal Reserve, contends that what’s happening in the housing market is “a very orderly and moderate kind of cooling.” Maybe he’s right. But if he isn’t, the stock market drop of the last two days will be remembered as the start of a serious economic slowdown.”
It will all end badly unless it doesn’t. Who knew?
I suspect something a bit more, well, prescient is out there and I would love to see it.