Sure enough, this week the Dow Jones industrial average has been hitting all-time highs, while the current yield on 10-year US government bonds is roughly half what it was when The Journal published that screed.
It gets better. He goes on to point out how terrible the track record of conservative economists over the last four years has been. He scoffed,
Don’t try to cover America’s uninsured, they told us; if you do, you will undermine business confidence and the stock market will tank. Don’t try to reform Wall Street, or even criticize its abuses; you’ll hurt the plutocrats’ feelings, and that will lead to plunging markets. Don’t try to fight unemployment with higher government spending; if you do, interest rates will skyrocket.
True, the eurozone cannot print money as the Fed is able, but that is ultimately the reason the markets are at the levels they are. For all of the talk of record profits, Wall Street has not seen quarterly earnings that support historic gains. The economy, although revised, grew at .1 percent. The Fed’s monetary policy is being reflected in the markets as future inflation. Paul, I am sure, learned this in Eco 101.
Currently, Moody’s rating agency has refused to downgrade America’s credit rating any further, as Standard & Poor’s and Egon Jones have already done. Paul will be eating his words against Alan Simpson and Erskine Bowles when they do. Previously, the bipartisan team had warned against “bond vigilantes” spiking rates within two years. Furthermore, investors were dumping Treasury bonds, pushing yields to a 10-month peak, until election outcomes in Europe forced them back. That isn’t a success, investors feel they are running out of places to go.
As for Mr. Krugman’s second comment, reality is the exact opposite of his insinuations. The largest single day post-election market loss in history, occurred after the election of Barack Obama. In 2012, the numbers were not as bad as the 5 percent drop in the DOW in 2008. However, equities in financials, health care, energy, the defense index .DFX, and the dollar itself, plummeted upon Mr. Obama’s re-election.
The new unemployment rate as of friday March 8th, is 7.7 percent. That is a reduction as the economy added 236,000 private sector jobs, much more than economists were expecting. But unfortunately, again the dip represents the 130,000 discouraged workers who dropped out of the labor force. The labor participation rate is 63.9 percent, which is the lowest since the 1970s.
Unfortunately, as much as we may want, one month of job creation over 200K cannot be interpreted as a trend. Companies such as JC Penney, Google, and Wal-Mart have all announced future layoffs. In fact, Wal-Mart has enacted a hiring freeze following the worst monthly start to sales in 7 years. In a Feb. 12 internal email to other executives, VP of finance and logistics Jerry Murray, called the figures “a total disaster.”
Even more scary, is how many people buy into Paul Krugman’s garbage. One comment from a reader states,
Whenever I hear the 1% referred to as “job creators”, I hear “wealth extractors”, since that is their chief aim, not providing better services and goods, as they promised. Everywhere the privateers set in place the means for extracting profits from the public sector, from the national, state and local levels, we all pay way more than we ought to. Privatization has been a major means for draining the public entities of our collective wealth.
First of all, why do these people feel that they are entitled to a promise, which of course, I have never heard made? I am not even sure what promise this liberal, user name KHL, is referring to. That is not how free markets work. If you do not like a product or service, then don’t buy or use it. That behavior pushes the producer to market a better product or service.
Secondly, if the private sector is beginning to add jobs at the current rate, it is in spite of Obama’s federal spending. While Paul Krugman has the big microphone, real economists are doing real work. The American Recovery and Reinvestment Act of 2009, “saved” or created over 400,000 public sector jobs, but destroyed over a million private sector jobs. As the study uncovers, which I have linked, is what we all knew to be the case. “Shovel ready,” is nothing but code for paying public unions and other campaign donors. If anyone is “extracting profits,” as KHL presumes, it is Obama for paying off his progressive public sector friends.
I actually feel sorry for user name KHL. Paul Krugman’s fantasy world has convinced her to listen to these straw man arguments, which have blinded people to the fact their is no “collective wealth.” The nation is almost 17 trillion dollars in debt.
I submit Paul Krugman is a coward for hiding on ABC with George Stephanopoulos. If he went on the O’Reilly factor, which he refuses to do, he and his progressive economic philosophy would be destroyed. I myself had challenged him to a debate and he promptly declined. But then again, I am a little fish compared to Mr. Krugman. He has a Nobel Prize and I do not. That should give him the confidence to accept these challenges instead of hiding in his liberal circles. My only stipulation, is that when he loses, I will post it on this website, as well as The Brenner Brief, for all Americans to see.
Rich is the author of Our Virtuous Republic: The Forgotten Clause in the American Social Contract, and a weekly contributor to The Brenner Brief.