Saturday, January 12, 2008

Krugman Warns...Again (Yawn)

Megan McArdle at’s Asymmetrical Information calls out Paul Krugman and his latest prediction for “Recession”-- noting he has been worrying about one for quite some time. She lists a series of Krugman quotes:

--"[R]ight now it looks as if the economy is stalling..." — Paul Krugman, September 2002

--"We have a sluggish economy, which is, for all practical purposes, in recession..." — Paul Krugman,
May 2003

--"An oil-driven recession does not look at all far-fetched." — Paul Krugman,
May 2004

--"[A] mild form of stagflation - rising inflation in an economy still well short of full employment - has already arrived." — Paul Krugman,
April 2005

--"If housing prices actually started falling, we'd be looking at [an economy pushed] right back into recession. That's why it's so ominous to see signs that America's housing approaching the final, feverish stages of a speculative bubble." — Paul Krugman,
May 2005

--"In fact, a growing number of economists are using the "R" word [i.e.,"recession"] for 2006." - Paul Krugman,
August 2005

--"But based on what we know now, there’s an economic slowdown coming." - Paul Krugman,
August 2006

--"this kind of confusion about what’s going on is what typically happens when the economy is at a turning point, when an economic expansion is about to turn into a recession" - Paul Krugman,
December 2006

--"Right now, statistical models ... give roughly even odds that we’re about to experience a formal recession. ... [T]he odds are very good — maybe 2 to 1 — that 2007 will be a very tough year." - Paul Krugman,
December 2006

So, how does all this doom compare to the economic record?

Like this:

Eventually of course we will have a recession and Krugman will get lucky... just like the proverbial ‘blind pig’. The real question is: how deep and how long ?

At McArdle’s place I commented with an extract of a G.B. Shaw quote:
"If all the economists were laid end to end, they'd never reach a conclusion."
Which I enjoy only marginally more than:

Q: Why did God make economists?
A: To make the Weathermen look good.

I loved Econ in college (sick, I know) but I've always marveled at how economists who live by the phrase of "All other factors held constant" never seem to fully appreciate how fantastic that assumption really is.

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