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A proud member of the reality based commentosphere since 2000. You can find my two Eurocent mainly at liberal and centrist discussion threads, but also at some other surprising places. Also tweeting now, as user "graygoods".

Wednesday, August 25, 2010

Krugman hit by boomerang

In a blog post today, Krugman tries to refute commenters who pointed to Germany's positive economical performance as alleged evidence for the advantages of reducing the deficit. Sadly, the good Prof seeked refuge to onesidedly using a GDP growth chart as a way to fight back, deliberately omitting the unemployment numbers which show a totally different picture. Just more of his usual badmouthing of Germany. He should have pointed to all the differences between Germany and the US instead, and argued that America can't simply copy single policies, but would have to copy the whole system to get into the same situation. That would have been more fair towards us, and the better argument, too. However, I already wrote about this, and I want to focus on another point now.

And that is that it actually was Krugman who played a most prominent role in providing this ammunition for the austerity advocates! Since the start of the year, he has been picking on Germany, complaining about us not doing enough for stimulus, and painting a picture of doom and gloom about the consequences of our (mostly cosmetic) austerity measures. During all those months, his readers waited for the bad news from Germany to show up in the headlines. But all they found were reports about a positive development month after month after month. Can he honestly blame them now for believing that apparently the rebound can be accomplished without much stimulus, and despite austerity policies? He distorted the situation in Germany for months, and now this turned out to be a boomerang that came back to hit him. Serves him well!

Really, with a lot of respect (and I'm still a fan), but Krugman's picking on Germany was unfair, misguided and strategically wrong. During the time he wasted trying to talk our folks into more of a stimulus, when the development showed them this wasn't necessary, the situation in the US deteriorated. I know, hindsight is 20/20, but didn't he ever have second thoughts that he may be flogging the wrong a**, uh, donkey? D'oh.

(based on a comment at Krugman's blog)

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Blogger William Timberman said...

You might want to check out Wolfgang Münchau's piece in the Financial TImes.
This was the argument that I was trying to make with my Quick Hit on OpenLeft the other day.

30 August, 2010 17:10  
Blogger Gray said...

Krugman cited Münchau today in his blog, too:
So, I already read that. Here's what I commented there:

"You expect us to pay attention to a Financial Times ( a rather conservative outfit) columnist who sees a shopping trip to the supermarket as an enlightening experience? A guy who is so unimportant that he doesn't even have a Wikipedia entry of his own? D'oh.

Just for your, and Münchau's, information: It's well known, for a long time, that discount prices in Germany are lower than everywhere else in the EU. It's the result of brutal competition on that market, and consequentially very low profit margins. German consumers are probably the most cost sensitive ones in Europe. Just an example how brutal this market is: WalMart Germany went broke! Nuff said."

Sorry, but I can't take Münchau for serious. With his ridiculous point about the supermarket prices he discredited himself as an expert. As I see it, Münchau is engaging in shallow Broderism with his column. Lame.

And I also wrote to Krugman:
"Hmm, why are you wasting your time with our alleged problems once again? We're doing fine, no reason for concerns, thank you very much! But while you're busy peeping across the ocean, prominent Dems are out to dismantle US social security! Or so Dean Baker says. How about weighing in on this much more urgent topic? I seems to me that the impact of such a crazy plan would be much more direct and devastating for your US readership than anything we Germans do!"

Really, enough already! Can't he pick on some other nations for a change, or even better, really weigh in on the hot US issues of today? Sigh.

30 August, 2010 19:40  
Blogger William Timberman said...

Yes, I read your comments on Krugman's piece after I submitted my post here.

It looks as though we're going to need a few more years before we see whose view of the present is confirmed by history.

Perhaps neither will be. It's happened to smarter people than either of us :-)

31 August, 2010 00:53  
Blogger Gray said...

Probably. I don't think Germany will really have 9% growth at the end of the year, either. Dunno when this happened the last time, must have been during the Wirtschaftswunder. There sure will be a bit of a slowdown. However, I don't think there will be a return into recession, the positive trend seems to be solid. Let's wait and see.

Well, I'm off to bed now. G'night, William, and thx for visiting this place!

31 August, 2010 01:28  

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