The Center for Geoeconomic Studies Destroys Paul Krugman

Paul Krugman has a lofty platform. He has a massive megaphone and an epic echo chamber. He has a Nobel Prize for economics. Does any of this mean we should listen to him? If you buy into this from Nassim Nicholas Taleb or the following, no.

When Friedrich von Hayek became a Nobel Laureate in economics in 1974 he said: “The Nobel Prize confers on an individual an authority which in economics no man ought to possess.” The truth of this is demonstrated daily by the case of Paul Krugman.

And some more evidence (there’s lots) that we’d be well advised to ignore Krugman? How about something from The Center for Geoeconomic Studies (associated with the Council on Foreign Relations) which shows he chose to cherry-pick his facts in order to “demonstrate” the “Icelandic Post-Crisis Miracle.”

We showed that Krugman’s “miracle” was merely an artifact of comparing changes in Iceland’s real GDP with that of Estonia, Ireland, and Latvia since the strategically chosen 4th quarter of 2007.

Why did Krugman choose the 4th quarter of 2007?  Because starting with any other quarter would have ruined his story.  Based on the GDP data available at the time he made his figure (which have since been revised), Iceland’s GDP had fallen a whopping 5 percentage points between Q3 and Q4.  By starting his story in Q4 Krugman managed to lop that off, making Iceland look much better.

We showed that the miracle story collapses as the starting date for the comparison is backed up.  What we find is a simple story of large booms and busts in Estonia and Latvia, and much smaller booms and busts in Iceland and Ireland.

Ah, the question of economics (and government): what’s your baseline?

The Center initially showed how Krugman constructed his false-miracle in 2010, but now he’s dragging the issue back to the surface. So what’s the real Krugman agenda?

Once again, Krugman has relied on a Potemkin-Village graphic to illustrate his wider claim, which is that Icelanders derive unambiguous net benefits from their government obliging them to hold and transact in a national currency that their trading partners will not accept. (80% of Greeks consistently reject going back to such a state.)

Liberal economists: choosing facts that support their positions, ignoring those that don’t.

Paul Krugman brings shame to the term “Economist”

John Lott’s take down of Paul Krugman, also known to this site as Paul Rugrat, is a great read and is totally on-target.

When I started this blog, my intent was to largely parody the idiotic columns written by the usual lefties: Paul Rugrat, Dana Milkbag, Moron Dowd, Robert Reich III, Charles Blows, et al.

I found the task far more difficult than imagined as their columns were already (if unintentionally) self-parodying to begin with. It was like reading The Onion, only funnier and paradoxically, also more sad. And none more so than Krugman, whose columns flirt with the absolute limits of human irrationality and denial.

“Economist,” thanks to Rugrat and his ilk, is now right up there with “politician” and “climate scientist” as far as earned respect, accuracy, and truthfulness are concerned.

Our B-team President

How does our smartest-ever President continue to fail us? Let us count a few of the ways (yes, space limits the number of examples provided):

• Professional politico can’t grasp presidential politics.
• Brilliant policy wonk doesn’t understand fundamental economic principles any better than Paul Krugman: recovery is in name only; numbers of poor increase; record debt and deficits; massive unemployed and underemployed numbers; record numbers on food stamps, up 70% since 2008.
• Insightful assessor of people puts non-credible idiots into a variety of critical positions.
• Health care visionary doesn’t get health care.
• Constitutional scholar fails to understand the Constitution and/or the legislative and judicial branches.
• Master diplomat and statesman causes regression in America’s standing.
• Moralistic man of transparency hides truth in his secret bureaucratic fortresses.

Leadership-wise, the President has managed to make John Kerry look like John Wayne; economically, Obama makes the Carter years look like the Clinton-era; morally, his White House is now making the Nixon Administration look like Mother Theresa.

Bill Clinton was right: Barack Obama is an amateur. Although amateurs may experience random successes, persistent failure—like what we’ve seen—is the pattern of behavior.

The iron illogic of Barack Obama

Understanding the iron illogic of Barack Obama—whether on the economy, personal freedom, national security, or foreign policy—is simple enough. He’s been steeped in disinformation, denial, and propaganda.

Although actions speak louder than words, the President’s language is clear enough: he believes in government. What is the likely cause of such belief? A massive personal investment made in seeking power and control, which can only happen via government.

Because government is the best tool to achieve the Obama agenda, he views it as good. Similarly, because Obama is the face of the federal government, more government (and more power and control) is therefore better. While Obama may, in his heart, have some concerns about the limits of unending government, these have never emerged in the manner in which he practices politics.

However, the President ignores the fact that government, like Soylent Green, is people.

People, even government-preferred people, must operate with certain restrictions which sometimes thwart the President’s politics. Of course, there are people who disagree with the President and with his practices. Because this second group has been unmoved by the President’s words, he works to ignore, demonize, and threaten them, normally in that order.

But by his words, the President shows that people—all people, even those that are government-preferred—can’t be really trusted and as such, they need to be protected from others and from themselves. Therefore, additional legislation and regulation, that is, more governmental power and control, is required. However, such legislation and regulation is written and practiced by people who, going full circle, still need to be protected from themselves.

Because of this conundrum, “elites” such as the President and his fellow travelers—apparently exempt from the weaknesses of the hoi polloi—are needed to watch the more ordinary watchers in a sort of grand bureaucratic pyramid. Watching the watchers is arduous work and warrants special privileges of all sorts, including a quasi-permanent ruling class. Keeping the correct elites in power becomes a critical task and those that support the elites will be rewarded.

Nowhere are the ideas of justice or truth to be found in Mr. Obama’s politics. Instead, we have ideals of “fairness” (imposed, of course) while truth becomes malleable; living and breathing and changing with the opinions of the elites.

For our President, “justice” needs to be actively steered and the idea of eternal truths, except that government is good (when directed by the correct elite), is simply absurd. Instead, his actions show that he believes when the American people are operating under the benevolent guidance of the government and as controlled by his elites, great things will naturally follow.

Of course, the President’s iron illogic falls apart in the face of facts on the ground. Ergo, facts must be suppressed, cherry-picked, spun, or otherwise mutilated into a storyline which is harmonious with the direction established by our (his) ruling class. The lack of a feedback process is causing the President’s entire paternalistic agenda—like that of Paul Krugman—to fall apart, a systemic failure which can then be rationalized as the work of evil and nefarious beings.

When the government—the elites—picks winners and losers, as they so often now do, these decisions result in the suboptimization of choice, or worse, misinvestment. History shows that when the market—the people—picks, things end better. But Barack Obama is the personification of the elites…and of their many cognitive flaws and the power and control agenda.

The iron illogic of the President is that these many biases, clearly seen by others but not by him, have made it impossible for him  to serve as the transitional president many hoped he could be. (That and his self-held superiority illusion.) Instead, America serves him.

How will the quest for an elite-led utopia end for Mr. Obama? Just as it always has and as it’s now trending; poorly.

How can a lie, repeated a thousand times, become the truth?

Yes, it’s true. A lie, repeated a thousand times, can become the truth. How so? Just change the definition of “truth.” (See homosexual marriage, or austerity. Human being-wise, “is-master” Bill Clinton comes to mind.)

The lie being repeated today is this: The Economic Argument Is Over — And Paul Krugman Won. How did Krugman win? Because Krugman fanboy Henry Blodget says so. And who is Blodget? He’s a banned for life financial-insider and $4 million disgorgement/fine guy whose bona fides speak for themselves.

What is the Blodget hypothesis?

…”stimulus” spending, economists like Paul Krugman argued, would help reduce unemployment and prop up economic growth until the private sector healed itself and began to spend again.

Yes, we saw how well that worked with the Democrats’ “stimulus,” did we not? And we’re still seeing it in America’s brilliant ongoing economic performance.

Blodget also says a spreadsheet error in has disqualified “austerity” and that we can continue to accumulate debt ad infinitum:

An academic paper that found that a ratio of 90%-debt-to-GDP was a threshold above which countries experienced slow or no economic growth was found to contain an arithmetic calculation error.

Once the error was corrected, the “90% debt-to-GDP threshold” instantly disappeared. Higher government debt levels still correlated with slower economic growth, but the relationship was not nearly as pronounced. And there was no dangerous point-of-no-return that countries had to avoid exceeding at all costs.

Despite Blodget’s assertions—not the same as proofs—reality suggests there are points-of-no return unless the debt accumulator, that is, national governments all around the world, decide to 1) inflate the debt away by making more money or 2) default. And there is, of course, the dread U.S. economic performance where the Obama recovery has been worse than the Bush recession.

They say economics is the dismal science. A better description would be that we have economists who are dismal pseudo-scientists. And those pseudo-scientists who can’t keep up with reality choose to write (as do those who are banned for life from the investment industry).

Oh and that “Nobel Prize for Economics” thing? A bit misleading, to say the least.

Food stamp alchemy will save America!

From the Washington Post comes the story of a food stamp recruiter.

Yes, a food stamp recruiter: someone who is paid to sign people up for food stamps.

And from a modest government pro-food stamp brochure comes the profound, even magical, secret to reviving our moribund economy:

“Every $5 in SNAP [AKA food stamps] generates $9.20 for the local economy.”

Yes, the magic multiplier, the secret to our economic recovery and eternal wellbeing, is the simple yet profound observation that $5 of federal taxpayer spending and/or borrowing creates $9.20 for the local economy.

As such, a Krugman-like solution to our current economic condition is simple: sign every American up for food stamps and we will reap almost twice the cost of our spending.

And thus, the miracles of the Bible are made to appear modest vis-à-vis the miracles of the economic scientism practiced by our leading thinkers. (Some, sadly, seem to disagree. Thankfully our enlightened leadership has accurately placed them into the “bitter clinger” category.)

Someday, hopefully soon, the carbon tax as a national-level value-added program will likely provide similar results… as it did with the President’s stimulus.

Bard College, Economists, Debt, and Deficit

WARNING: economist fail ahead.

Parents, save your money if you’re considering Bard College for your high school student, at least based on the quality of this piece from Dimitri Papadimitriou (check that man’s green card!). Why so hard on the Bard? Because Papadimitriou is president of the Levy Economics Institute at Bard and is an executive vice president there.

(And when you hear those impressive sounding credentials, ponder that Barack Obama is President of the United States.)

Where is it that Papadimitriou fails in his article, a plea for yet more government spending and debt? In a word, everywhere. That is, in his disingenuousness, in his diagnosis, and in his prescription:

The deficit has arguably gained the distinction of being the single most widely misunderstood public policy issue in America. Just 6% (6!) of respondents in a recent poll correctly stated that it had been shrinking, which has in fact been the case for several years, while 10 times more, 62%, wrongly believed that it’s been getting bigger.

Despite prevailing notions in the capital and throughout the nation, those of us at the Levy Economics Institute — along with many other analysts and economists — have concluded that the deficit should be increased.

Why add to the deficit right now? Jobs. Our economic models clearly show that without increased government outlays we’ll be unable to generate enough GDP growth to seriously attack unemployment. If we tried to balance the budget through tax hikes, our still-recovering economy would be hurt. That leaves a temporarily bigger deficit as an important option.

Papadimitriou fails to acknowledge that things that can’t continue forever—like the federal debt and massive yearly deficits—won’t. At this point, it should be clear to most people that the government can’t fulfill all the promises it’s made, nor will it be able to repay its debt without the magic of inflating it away.

Papadimitriou also fails to point out that under President Obama’s leadership the debt has increased every year, and his Administration’s deficits made George W. Bush look like a piker. And while government can create jobs, it can’t create value, which is what we the people are really after. Remember “the stimulus” and what it did—based on results and not theory—to “fix” unemployment? In short, central planning fails.

Yes, the government managed construction of a courthouse might cost $145 million while private industry doing the same brings the identical building in at $85 million, so it’s possible to make the case the government version of the project created more jobs, but that doesn’t make the government version more valuable, it just makes it more expensive. Yet to a man like Papadimitriou, the government version magically “added” another $60 million to our GDP. 

“Economics,” as practiced by those like Brad DeLong, Paul Krugman, and Dimitri Papadimitriou is little more than politics with a fig leaf and more plainly, intergenerational theft.

How the Administration can spin the economy

The economy grew at an anemic 0.4% in the fourth quarter. But that’s the good news; it was only expected to grow 0.1%.

As such, economic giants like Paul Krugman and Brad DeLong can rightly claim that growth was 400% greater than expected.

Expect a public service announcement from Organizing for America touting the same—the 400%, not the 0.1%—to be released at 1PM Eastern Time.

Main stream media makes replacement refs look like true professionals

Often you’ll get a “re-edited” warning before a television movie starts. It normally goes like this: This film has been modified from its original version. It has been formatted to fit this screen. Films are often edited for content (sex, nudity, violence, language, smoking, disturbing images, drug use, etc.) and time as well.

With the traditional media the re-edited warning should go as follows: This political video/audio clip has been modified from its original version. It has been edited to fit the agenda of this network, producers, editors, reporters, and hosts.

And while most everything created comes from an autobiographical point of view, it’s somehow easier to filter the biases in print. It’s called closing the tab (or if it’s Dana Milkbag, Tom Frymom, Paul Rugrat, Moron Dowd, or Charles Blows, it’s reading the first paragraph, laughing your guts out—generally not the author’s intent—and then closing the tab).

The biases of edited video/audio clips seen on television, created with a particular point of view and with a particular agenda, are more difficult to filter. After all, when deceptively editing audio/video content, the MSM is taking deliberate action to create a new/false “reality” with political malice and forethought. How is such deception different from lying? It isn’t.

Second, it can be difficult to reconcile what you’ve seen with your own eyes via MSNBC’s deceptively, cleverly, and subtly edited bite designed to denigrate Mitt Romney, even if you know MSNBC couldn’t find basic journalistic principles if they were taped to their shoes. The MSNBC video certainly fooled the Mourning Joe host (pun intended and if you liked that, I’ve got a million more).

So we’re at the point where the gruesome fails of the traditional media make the NFL’s replacement referees look like consummate professionals. In fact, unlike the replacement refs who lacked malice, the MSM seems to be both inept and covetous of the power of the referee.

And how is that made manifest? By a press that’s shown itself to be chock-full of politicos, amateurs, ideologues, and frauds who are attempting to present a false front of objectivity (including fake/sold out house conservatives like Joe Scarborough) while spinning, throwing false flags, and lying for their team.

Has the media’s performance hit bottom yet? Absolutely not: the election is still to occur. And should Romney be elected, their attempts to destroy him will make their anti-Bush agenda look like a first-grade Christmas pageant.

The case for a return to the gold standard

While the issue of causation versus correlation can be argued all day, Louis Woodhill at Forbes makes a compelling case for moving the dollar out of the “fiat currency” category and once again pegging it to a known standard. Like gold.

I suppose when the dollar was moved off the gold standard, it was viewed as a radical and wild-eyed idea (or maybe not, since it was politically inspired and handed politicos the keys to the printing presses), just as a return to a standard is now viewed as archaic, an anachronism, and basically, freaky-deeky. The floating dollar was sold as temporary issue (part of the Nixon shock) and—whatyaknow—it became permanent.

But the real issue is one of control. When the dollar is tied to a standard, crony capitalism, rent-seeking, and regulatory capture are more difficult for the government to practice. The best impact of returning the dollar to a standard is that this “malinvestment” (think dot com and housing bubbles and the looming entitlements hard-landing/implosion, AKA inflation) would seem to be less likely to occur, largely because investment risk would decrease.

The loss of flexibility (that is, a diminished ability for our enlightened elites to influence the economy—to pick winners and losers) would be the downside…but only for the aforementioned enlightened elites.

Destroying progressive economists with half his brain tied behind his back

Art Laffer destroys liberal economists (and politicos) and their on-going call for mo’ stimulus.

The bottom line:

Of the 34 Organization for Economic Cooperation and Development nations, those with the largest [government] spending spurts from 2007 to 2009 saw the least growth in GDP rates before and after the stimulus.

The four nations—Estonia, Ireland, the Slovak Republic and Finland—with the biggest stimulus programs had the steepest declines in growth. The United States was no different, with greater spending (up 7.3%) followed by far lower growth rates (down 8.4%).

The liberal economists will no doubt say “But it would have been so much worse without the stimulus.” Such an argument ignores the facts of this case: mo’ stimulus = mo’ economic shrinkage. It also ignores the fact the “stimulus” has to be repaid.

More:

…the truth is that government spending does come with debits. For every additional government dollar spent there is an additional private dollar taken. All the stimulus to the spending recipients is matched on a dollar-for-dollar basis every minute of every day by a depressant placed on the people who pay for these transfers. Or as a student of the dismal science might say, the total income effects of additional government spending always sum to zero.

I’d suggest that given the bureaucratic transaction costs and poor “investment” choices the government makes (think Solyndra, GM, et al) that the value gained is less than zero. And there’s still the moral hazard of mo’ stimulus:

Meanwhile, what economists call the substitution or price effects of stimulus spending are negative for all parties. In other words, the transfer recipient has found a way to get paid without working, which makes not working more attractive, and the transfer payer gets paid less for working, again lowering incentives to work.

When liberal economists (“experts” like Paul Krugman or Brad DeLong—how often we confuse credentials with knowledge) need to make a point, they often pull out a model or truncate the data. And as with global warming climate change climate chaos, all that’s required to get the desired results is to change the model’s algorithms and/or its inputs.

Economic reality is a creation of the imagination and is to be ignored

How would Paul Krugman, Brad DeLong, et al (that is, “many economists”) explain Sweden? Likely by denying reality.

While the rest of Europe and the United States have gone on massive spending sprees fueled by government borrowing and tax hikes, Sweden took a different approach. In the Spring 2012 Economic and Budget Policy Guidelines, the Swedish Government and its Finance Minister, Anders Borg, have laid out a plan that is focused on lowering taxes. Their rationale? “When indviduals and families get to keep more their income, their independence and their opportunities to shape their own lives also increase.”

Snip:

So why didn’t Sweden hop on the stimulus bandwagon like the U.S. and much of Europe?

Anders Borg explains, “Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus… Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.” We have now seen that attempts at austerity within the Eurozone have met a similar fate: none of it was serious. As spending increases have been squandered, spending cuts have been a charade, failing to target the big government programs at the core of the debt crisis.

Stuck with the debt. Of course stuck with the debt assumes that there won’t be the Krugman favored “debt relief,” AKA default, haircuts, or massive inflation.

The lesson from Keynesianland: always a borrower be. And for the lenders that are required for the borrowers to borrow? There’s a sucker born every minute. And that sucker has a printing press and/or the ability to “buy” government debt.

Snip:

Despite slow projected growth for 2012, Sweden is expecting annual GDP growth of over 3 percent starting next year, projected out through 2016 by which time their unemployment is expected to slide down to just about 5 percent. During this time the Swedish gross debt is expected to drop from 37.7 percent/GDP to 22.5 percent/GDP as a result of government surpluses. For comparison, US gross debt to GDP is well over 100 percent and climbing. All this success must be on the backs of the working class right? Wrong. Wages are slated to rise in Sweden by nearly 4 percent annually through 2016.

The recovery-by-stimulus model has failed across the board, and as Mr. Borg has pointed out, we are still stuck with the damage it has done. With the refusal of the Obama administration, Congress, and their European counterparts to accept serious spending cuts, maybe it’s time to try something that’s actually working.

Something that’s actually working. Imagine the possibilities.

Remember and repeat: it’s Bush’s fault

From Paul Rugrat (AKA Paul Krugman) on how a bureaucratic functionary undid the otherwise spring-loaded-for-success Obama economy: it’s Bush’s fault.

…this week’s shocking refusal to implement debt relief by the acting director of the Federal Housing Finance Agency — a Bush-era holdover the president hasn’t been able to replace — illustrates perfectly what’s going on.

First, the Rugrat seems to forget President Obama’s history of making recess (and unconstitutional) appointments when the Senate is in session, so with that explanatory-fail out of the way, onto more non-explanation:

Some background: many economists believe that the overhang of excess household debt, a legacy of the bubble years, is the biggest factor holding back economic recovery. Loosely speaking, excess debt has created a situation in which everyone is trying to spend less than their income. Since this is collectively impossible — my spending is your income, and your spending is my income — the result is a persistently depressed economy.

How should policy respond? One answer is government spending to support the economy while the private sector repairs its balance sheets; now is not the time for austerity, and cuts in government purchases have been a major economic drag.

Many economists? Yes, and four out of five dentists recommend sugarless gum for their patients who chew gum.

And Paul, there is the government who’s now about 25 percent of the economy and they’re spending about 140 percent of their income. This very same government has spent over $5 trillion more than its income during the Obama era.

…the Federal Reserve’s refusal to act in the face of high unemployment and below-target inflation is a scandal.

But fiscal and monetary policy could, and should, be coupled with debt relief. Reducing the burden on Americans in financial trouble would mean more jobs and improved opportunities for everyone.

The Fed has bought much of the government’s debt (over 60% in 2011) the Obama Administration has created, so to follow the Rugrat’s logic, maybe the Fed needs debt relief.

Or perhaps the government itself needs debt relief. Or even the American people who fund the government.

After all, each taxpayer’s share of the national debt is about $194K and $64K of that has happened on Obama’s relatively short watch. And those numbers don’t include the nation’s true unfunded liability which is closer to $500K per taxpayer.

The real lesson? Who—besides the government—will loan money without an expectation of repayment (let alone reasonable return)? Not even a fully indoctrinated lefty like the Rugrat would do that.

While the President can’t control the economy, he can influence it. Obama has and his influence—all of it bad—is his legacy.

Finally, Paul (and Barry), It isn’t the taxes. It’s the spending.

Mental health care in America

Institutionalized mental health care has collapsed through the years.

…across the country, the number of psychiatric beds has shrunk dramatically in recent decades.

The Treatment Advocacy Center’s study pegged the decline at nearly 90 percent — from one psychiatric bed for every 300 Americans in the 1950’s to one bed for every 3-thousand today…

This decline may help explain why so many from the New York Times op-ed writers (Charles Blows, Tom Frymom, Paul Rugrat, et al) are still roaming the street. That and subsidies.

Danger: liberal economist ahead

Among the most destructive things known to man is an idiot with initiative.

Brad DeLong is a liberal economist. With initiative. You do the math.

From DeLong:

The S&P stock index now yields a 7% real (inflation-adjusted) return.

One might ask, “Brad, just when is now and what did you use as your start and stop points?”

Such questions are not unreasonable as this site says the S&P 500 Dividend Yield is 2.09% as of 4:30 pm EDT, Thu, 31 May 2012.

Or you might use the S&P 500 Total Annual Returns which is listed for 2012 as 2.05%.

Paul Krugman is also a liberal economist. With initiative.

Smells like Obama fear-it

Maybe it’s the poll numbers. Maybe it’s the undeniable Obama-led decline.

Maybe it’s the fact the President makes Jimmy Carter look like John Wayne.

But whatever it is, the left is afraid. Very afraid.

Evidence is everywhere. Another stick for the left’s forest fire of fear comes from Joe Klein. Klein was the 2011 runner up for the worldwide Paul Krugman without a wig look-alike contest. The winner of that competition won a Chevy Volt. Joe won two Chevy Volts.

Anyway, Joe is afraid. How afraid? He’s so afraid he shares his brilliant wisdom and insights with all (and he hopes, maybe some Republican establishment type with access to the Romney campaign).

There’s a front page story in the New York Times about the possibility that a right-wing Super PAC will launch a racially charged attack against President Obama centering on his relationship with the dreadful Reverend Jeremiah Wright. This is the campaign that John McCain famously, and honorably, refused to launch in 2008.

It doesn’t take much reading between the lines to come to the conclusion Klein is terrified about the 2012 election. Right-wing. Super PAC. Racially charged.

And since McCain was honorable by not pursing the Wright-Obama connection, the Romney campaign (or Super PAC) would of course be dishonorable in pursuing such a relationship. (Yet does anyone think a pro-Obama Super PAC or the Obama campaign itself wouldn’t attempt to exploit such a similar relationship if they could?)

Klein, further attempting to dissuade, presses on.

I think, on its face, the campaign is ridiculous, given what we now know of the President. We now know, for one thing, that he isn’t much of a church-goer–his claim that he wasn’t around for Wright’s incendiary sermons rests on the solid basis of all the Sundays he’s spent playing basketball and on the golf course.

I suppose that explains why Obama can attribute his position on homosexual marriage to his theology: he’s ignorant. But again, it’s a case of the left wanting it both ways: Obama is a Christian theologian when it’s convenient and an irreligious sop when not.

But the President has shown that the Jeremiah Wright-induced fears were groundless. He’s not a black militant. He’s a moderate.

Based on Klein’s sloppy writing, it’s impossible to discern if he’s asserting Obama is a moderate or if Jeremiah Wright is. But the idea either of those two men could be described as moderate is at minimum indicative of simple-mindedness, or more likely, willful self-deception.

Prediction: Romney will keep his powder dry on Barry’s long-time friend.

And why not? Obama’s shown he can do bad all by himself.

Austerity Doublespeak

As background, consider this: man is the only creature who can deceive himself.

Now onto the economic topic of the week, austerity.

Austerity is alleged to have use as an economic term. However, its precise definition is unclear and it seems austerity can mean many things to many people.

Traditionally, austerity was thought to mean something like “reduced availability of luxuries and consumer goods, especially when brought about by government policy.”

So how was the austerity effort in Europe received? Poorly, it would appear based on recent elections. In fact, in alt-reality land, austerity is being declared dead by  bright and shining stars including Paul Krugman, Robert Reich, and Eugene Robinson.

There is, however, a more reality based assessment. And it comes from IBD:

Now, the left’s argument goes, a new “growth strategy” premised on more government spending, not less, is needed — just like in Spain, Greece and Italy.

The only problem: The idea of EU austerity is a myth.

Only the left (and/or the traditional media) would view more government spending as a growth strategy. If such a strategy were to work, wouldn’t you think the people’s long and glorious history of government deficits would have created such growth? And that it would especially gotten better in the last half-decade?

Or would you instead think low levels of productivity, high levels of government interference (and taxes), and bad demographics have led the left to the edge of the fiscal cliff?

Back to IBD:

Austerity? Spending has boomed in the EU over the last decade. During the 2000s, EU member nations collectively boosted government outlays by 62%. Average government spending by EU nations today stands at about 49.2% of GDP — vs. 44.8% in 2000.

On its own website, the EU itself ridicules the notion of government austerity as a “myth.”

“National budgets are NOT decreasing their spending, they are increasing it,” the EU says, noting that in 2011, 23 of the 27 nations in the EU increased spending. This year, 24 of 27 will do so.

Just as an obese person can observe an strict regimen of diet and exercise for a day or two, the EU fail nations (especially Greece, Spain, Italy, and perhaps soon, France) are alleged to have attempted to practice austerity for a few months—even though the EU knows it isn’t true—and they are now resolved: they will limit themselves to a family sized bag of Cheetos washed down with two-liters of Coke and a half-gallon of Chunky Monkey as dessert. For breakfast.

Because of the recent electoral outcomes in Europe, the anti-austerians are declaring austerity is a failure; austerity had its fifteen minutes of fame in Europe and now its as dated to the left as Milli Vanilli is to the rest of the world.

Instead, just remember that George Orwell was ahead of his time. Today, the anti-austerians favor doublespeak which changes the meaning of words and actions as convenient. For them, austerity means more government spending.

After all, the machine must be fed. And ignorance is strength.

The insanity of liberal economists

Linsanity is (was) the Jeremy Lin phenomenon.

Insanity is doing the same thing over and over and expecting different results.

Argument from ignorance asserts a proposition is true because it has not yet been proven false.

This makes Paul Krugman and Robert Reich, AKA Paul Rugrat and Robert Tyke insane. And ignorant.

Jeremy Lin is merely on the Knicks injured reserve, but he could be back for game five versus the Heat. Were he to suffer a brain injury instead of a knee injury, he might want to consider a future as a liberal economist. But I digress…

Both Krugman and Reich offer the same “economic” shtick over and over again: Borrow more money. Spend more money. Print more money. Repeat ad infinitum until the next national-level collapse and/or revolution.

From the Rugrat:

Critics [like Krugman himself] warned from the beginning that austerity in the face of depression would only make that depression worse.

Snip.

…the failure of austerity policies to deliver as promised has long been obvious. Yet European leaders spent years in denial, insisting that their policies would start working any day now, and celebrating supposed triumphs on the flimsiest of evidence.

The failure of austerity policies in the above context means this: to try and approach living within a nation’s means. Snip.

…serious analysts now argue that fiscal austerity in a depressed economy is probably self-defeating: by shrinking the economy and hurting long-term revenue, austerity probably makes the debt outlook worse rather than better.

Yes, the Rugrat considers himself a serious analyst. And perhaps because no one has come up with a model to disprove him, regardless of the self-evident non-austerity fail, he considers his hypothesis to be true. And Reich is cut from the same dwarfish cloth.

Here’s Reich, who is at least more succinct (if no less insane):

Blame it [that is, the epic European economic fail, sans Germany] on austerity economics – the bizarre view that economic slowdowns result from excessive debt, so government should cut spending.

Naturally, the Europe to America implication is this: bad things will happen to the United States should we practice “austerity.”

Yet only a liberal economist (or two) could think the U.S. Government adding over $6.2 trillion to the national debt in the last four fiscal years is somehow approaching the aforementioned and dangerous austerian approach.

That’s because we all know that deficit government spending somehow magically creates a multiplier effect of something greater than 1.0. Except when it doesn’t. Like for at least the last four years.

And such borrowing becomes problematic if the money isn’t paid back, or if it is, if it’s paid back at less than full value, either due to financial haircuts or inflation.

As to the serious analysts tag the Nobel Prize winning Krugman credits himself with, I must defer to polymath Nassim Nicholas Taleb of The Black Swan fame. Taleb refers to the aforementioned Nobel Prize in economics as “absurd” “pseudo-science” which is “reminiscent of medieval medicine.” And he’s got more, far more, but here’s a good representative chunk:

…economic models, it has been shown, work hardly better than random guesses or the intuition of cab drivers…

Other than that, liberal economists should be inherently trusted, honored, and deferred to. At least as much as random guesses and cab drivers.

A Liberal Economist Crashes on the Rocky Shoals of Reality

Everyone needs to read Paul Krugman once in a while, if for no other reason than to make you feel better about your own intellect.

Don’t be dismayed by Krugman’s shrill tone and vacuous logic, just laugh along and remember this lesson: man is the only creature who can lie to himself.

Krugman has a column called Natural Born Drilllers and yes, reading it will make you feel better about yourself. In fact, it makes one wonder: if a man like Krugman can win a Nobel Prize in Economics, how bad were that year’s non-winners? What a terrifying thought…

Today Krugman tells us “…U.S. energy policy has very little effect either on oil prices or on overall U.S. employment.”

Of course, the statement is self-evidently absurd. Don’t believe me? Well, shuffle the statement around, and make it read like this: Saudi Arabian energy policy has very little effect either on oil prices or on overall Saudi employment. Is it absurd yet?

Or maybe broaden it even more: nowhere on earth do energy policies have much effect on either oil prices or on overall employment.

Paul, consider my alternate hypothesis: our energy policy massively effects oil prices, and ergo, overall U.S. employment. How so, you ask?

Because all other things being equal, $2 a gallon gas is likely to leave a household (that drives 20,000 miles a year in a vehicle that averages 20 mpg) an extra $2000 in disposable income versus $4 a gallon gas. Most households are going to spend at least a bit of that $2000 and spending creates a need for workers. People working, Paul, effects unemployment.

Krugman is merely attempting to carry the water for the Administration on this topic. Charles Krauthammer, as an alternative, offers this:

“The American people aren’t stupid,” said Obama on February 23, mocking “Drill, baby, drill.” The “only solution,” he averred in yet another major energy speech last week, is that “we start using less, that lowers the demand, prices come down.” Yet five paragraphs later he claimed that regardless of “how much oil we produce at home . . . that’s not going to set the price of gas worldwide.”

So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does. Does Obama read his own speeches?

I think the President reads them; I mean he reads them to us at least. The problem is with his reading comprehension.

While the President can’t control oil prices, he can influence them. And he has.

Which Has More Predictive Power: Nobel Prize Winning Economist or Chicken Bones?

Which predictor possesses more accuracy and explanatory power, a Nobel prize winning economist or chicken bones?

If the Nobel prize winning economist is Paul Krugman, I’ll take my chances with the chicken bones.

A recent Krugman column purports to be about education—it’s about politics—and this short quote, about attending college.

Here’s what the candidate [Mitt Romney] told the student: “Don’t just go to one that has the highest price. Go to one that has a little lower price where you can get a good education. And, hopefully, you’ll find that. And don’t expect the government to forgive the debt that you take on.”

Wow. So much for America’s tradition of providing student aid.

Only a mind like Krugman’s could take cheaper and good and don’t expect the government to pay your way and turn it into an anti-student aid theme. Paul, does the phrase non sequitur mean anything to you?

And because we know that spending = knowledge, here’s more of Krugman’s heart-felt concern:

Adjusted for inflation, state support for higher education has fallen 12 percent over the past five years, even as the number of students has continued to rise; in California, support is down by 20 percent. 

Wow. Has state support for higher education really held up better than home values? Interesting… 

Paul, because states can’t print money like the federal government can, this is what happens in the real world: they do this thing called spending less (disclaimer: spending less is more likely to be a reduction in the rate of growth).

And by the way, college is a fee-for-service arrangement. Is that somehow counterintuitive? If so, I’ll try and explain: the student pays a fee and in return, is to receive an education (another disclaimer: your results may vary).

Still Krugman keeps swinging. He must be on a very serious deadline, that is, one that allows for no introspection or thought… or else this is just the way he “thinks.” If so, scary:

Another result is that cash-strapped educational institutions have been cutting back in areas that are expensive to teach — which also happen to be precisely the areas the economy needs. For example, public colleges in a number of states, including Florida and Texas, have eliminated entire departments in engineering and computer science.

Paul, the reason they don’t have those classes is the student demand isn’t there. They’re all taking gender, sex, race, and equality studies. And economics.

Krugman’s column carries the title Ignorance is Strength, an attempt at Orwellian irony. The real irony is it should have been entitled Ignorance is Expensive and as evidence, try getting back the three minutes of your life you’ll have “invested” should you choose to read said column.

How the New York Times remains open with writers like Krugman defies ordinary explanation.