Wednesday, September 01, 2010

Wrong on the Bubble, Wrong on Stimulus

Oh, now this is beautiful. Simply beautiful. Economics of Contempt posted a list of all the prominent housing bubble deniers from around 2005 or so. An endless list of AEI and Cato and Wall Street Journal "limelights" all insisting that the economy is fine, that housing is fine, and that anybody who is complaining about it is just an idiot.

Nice, but that's not the fun part.

The fun part is when Krugman revealed that all of these guys are stimulus opponents too! In fact:
There turns out to be a quite strong correlation between denying the existence of a housing bubble a few years back — and jeering at those who said there was — and insisting, now, that fiscal stimulus doesn’t, can’t work.

The question is, why do such people command such attention? As I’ve pointed out before, the same people who denied the existence of a housing bubble also told investors that budget deficits would send interest rates soaring; in other words, anyone who believed these people in the past, and acted on that belief, has lost a lot of money.
It's the same sort of Very Serious Person that was wrong on Iraq, wrong on Afghanistan, and (going back farther) wrong on the Cold War and on Vietnam. It's hard to see what these guys are RIGHT about, actually; they're so reliably wrong that you could probably make a fortune betting against their predictions!

The problem...the significantly less funny that by the time their allies in Congress are done, you're going to NEED a fortune. Because once they're done with Social Security and Medicare, it's the only way you'll spend your retirement doing anything but eating cat food and wondering whether that lump will go away on its own.

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