Prof. Krugman has the ability to show in simply words some of the most complex thoughs. Although he is not my favourite economist, he is among my top ten both thinking and writing.
His statement "What was truly impressive about the decade past, however, was our unwillingness, as a nation, to learn from our mistakes.". It cannot be more accurate and the very precise diagnose. It is simply astonishing when watching from abroad that American economists think again and again in financial terms. How can some people educated in universities and supposedly smart can use exactly same techniques and methods created forty or fifty years ago and proved wrong twenty years ago? Did their capacity of learning evaporate? Appalling. Peace and best wishes. Xi On Dec 29, 1:37 pm, "Sumerian.." <[email protected]> wrote: > http://www.nytimes.com/2009/12/28/opinion/28krugman.html > > Op-Ed Columnist > > The Big Zero > > By PAUL KRUGMAN > > Published: December 27, 2009 > > Maybe we knew, at some unconscious, instinctive level, that it would > be an era best forgotten. Whatever the reason, we got through the first > decade of the new millennium without ever agreeing on what to call it. > The aughts? The naughties? Whatever. (Yes, I know that strictly > speaking the millennium didn’t begin until 2001. Do we really care?) > > Skip to next paragraph > > Fred R. Conrad/The New York Times > > Paul Krugman > > Go to Columnist Page » Blog: The Conscience of a Liberal > > Readers' Comments Readers shared their thoughts on this > article. Read All Comments (418) » > But > from an economic point of view, I’d suggest that we call the decade > past the Big Zero. It was a decade in which nothing good happened, and > none of the optimistic things we were supposed to believe turned out to > be true.It was a decade with basically zero job creation. O.K., > the headline employment number for December 2009 will be slightly > higher than that for December 1999, but only slightly. And > private-sector employment has actually declined — the first decade on > record in which that happened.It was a decade with zero economic > gains for the typical family. Actually, even at the height of the > alleged “Bush boom,” in 2007, median household income adjusted for > inflation was lower than it had been in 1999. And you know what > happened next.It was a decade of zero gains for homeowners, even > if they bought early: right now housing prices, adjusted for inflation, > are roughly back to where they were at the beginning of the decade. And > for those who bought in the decade’s middle years — when all the > serious people ridiculed warnings that housing prices made no sense, > that we were in the middle of a gigantic bubble — well, I feel your > pain. Almost a quarter of all mortgages in America, and 45 percent of > mortgages in Florida, are underwater, with owners owing more than their > houses are worth. Last and least for most Americans — but a big > deal for retirement accounts, not to mention the talking heads on > financial TV — it was a decade of zero gains for stocks, even without > taking inflation into account. Remember the excitement when the Dow > first topped 10,000, and best-selling books like “Dow 36,000” predicted > that the good times would just keep rolling? Well, that was back in > 1999. Last week the market closed at 10,520.So there was a whole lot of > nothing going on in measures of economic progress or success. Funny how that > happened.For > as the decade began, there was an overwhelming sense of economic > triumphalism in America’s business and political establishments, a > belief that we — more than anyone else in the world — knew what we were > doing.Let me quote from a speech that Lawrence Summers, then > deputy Treasury secretary (and now the Obama administration’s top > economist), gave in 1999. “If you ask why the American financial system > succeeds,” he said, “at least my reading of the history would be that > there is no innovation more important than that of generally accepted > accounting principles: it means that every investor gets to see > information presented on a comparable basis; that there is discipline > on company managements in the way they report and monitor their > activities.” And he went on to declare that there is “an ongoing > process that really is what makes our capital market work and work as > stably as it does.”So here’s what Mr. Summers — and, to be fair, > just about everyone in a policy-making position at the time — believed > in 1999: America has honest corporate accounting; this lets investors > make good decisions, and also forces management to behave responsibly; > and the result is a stable, well-functioning financial system. What > percentage of all this turned out to be true? Zero.What was truly impressive > about the decade past, however, was our unwillingness, as a nation, to learn > from our mistakes. Even > as the dot-com bubble deflated, credulous bankers and investors began > inflating a new bubble in housing. Even after famous, admired companies > like Enron and WorldCom were revealed to have been Potemkin > corporations with facades built out of creative accounting, analysts > and investors believed banks’ claims about their own financial strength > and bought into the hype about investments they didn’t understand. Even > after triggering a global economic collapse, and having to be rescued > at taxpayers’ expense, bankers wasted no time going right back to the > culture of giant bonuses and excessive leverage.Then there are > the politicians. Even now, it’s hard to get Democrats, President Obama > included, to deliver a full-throated critique of the practices that got > us into the mess we’re in. And as for the Republicans: now that their > policies of tax cuts and deregulation have led us into an economic > quagmire, their prescription for recovery is — tax cuts and > deregulation.So let’s bid a not at all fond farewell to the Big > Zero — the decade in which we achieved nothing and learned nothing. > Will the next decade be better? Stay tuned. Oh, and happy New Year. > > ======= > S1000+ > ======= -- You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/world-thread?hl=en.
