This Week in More Excellent Economic News

30 May

Smartypants blog:

Back to work in Lordstown, OH

We all know that there’s still a lot to do in getting people back to work. But the people of Lordstown, OH aren’t questioning President Obama’s commitment to working class Americans.

http://www.cbsnews.com/stories/2011/05/25/eveningnews/main20066229.shtml

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ThePeoplesView:

Geithner was right and Krugman and Stiglitz were wrong

by rootless_e

In the early months of the Obama administration, with the economy in free-fall and Bush’s bank bailout having poured hundreds of billions into an apparently bottomless bank collapse, Nobel Prize winners Paul Krugman and Joe Stiglitz among others “on the left”, authoritatively and confidently explained that the policies advanced by the new Administration were naive, stupid, complicit, and sure to fail abysmally and catastrophically. The extent of the error made by these economists and others, like Dean Baker, Simon Johnson, and Robert Reich, not to mention all their often ludicrously ignorant followers in “progressive” blogs is all the more remarkable given their subsequent lack of interest in figuring out why they were so wrong or even admitting to error in the first place.

I was under the impression that he might bring in the voices of brother Joseph Stiglitz and brother Paul Krugman. I figured, OK, given the structure of constraints of the capitalist democratic procedure that’s probably the best he could do.
-Princeton Professor Cornel West (not a hotel porter)

The basic Krugman/Stiglitz argument was that the financial markets had correctly priced bank assets as junk and so the biggest banks owed more money than they could ever repay and the government should “nationalize” them. The Administration, on the other hand, said that the financial markets were in the grip of a panic and that arranging for temporary government and government/private finance would calm things down at less cost to the taxpayer. Obviously, Geithner, Obama, and Bernanke were correct and the critics from the left were incorrect – the banks have stabilized, the “toxic assets” purchased by government have turned out to be a great investment, and the economy is recovering slowly, not smoldering in ruins.

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