Wednesday, June 16, 2010

In Which Tyler Cowen Is Much More Dismissive of Krugman Than I've Ever Been

. Wednesday, June 16, 2010

Here. The title refers to commenters on recent previous posts.

Check out the CDS spread, the market is now more worried about a Spanish government default than a default from either Banco Santander or a major telecom company.

And yet we are told there are no market signals that European governments are spending too much. We are also told that the Spanish government can do OK with its halfhearted austerity plan or maybe they should even be spending more. Those discussions usually stop at the mention of a single interest rate or perhaps an unemployment figure.

In case you were wondering, Banco Santander and major telecom companies are in big trouble. I've been reading Marginal Revolution every day for six or seven years, and that has to be the most hysterical that I've ever seen Cowen. And while this post is not addressed to Krugman, it is certainly directed at him. Quite frankly, there is so much nuance in this discussion that I'm not sure who is right on the economics. But I do know who is wrong on politics -- the detailed answer is in posts from earlier this week, but psst: it's Krugman!! -- and I know that those wrong views about politics are influencing the economic advice that Krugman is giving. Which makes me think that even if Krugman is right on the economics given his assumptions, his assumptions do not hold in this case, and therefore he is also wrong on the economics.

But maybe not.


In Which Tyler Cowen Is Much More Dismissive of Krugman Than I've Ever Been




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