I'm listening to the Sabbath Gasbags. The cognitive dissonance is painful. The economy is about to go off a cliff because of the triple whammy of budget deficits, trade deficits and household indebtedness, we are the authors of a catastrophe in Iraq which is horrifying the rest of the world, a world already stunned by Bush's re-election, and the nabobs are nattering about politics as usual.
I listened to Paul Krugman on Book TV yesterday. He was talking about his collection, The Great Unraveling, and gave a version of the Q&A I'm quoting here:
Q: You have articulated the fact that we may be headed toward an Argentinean-style catastrophe. How strongly do you feel about that prediction, how do you defend it, and when do you see the collapse hitting the U.S. if we continue on the same course?
A: I still think of my role at The New York Times and all of that as not being real life. In real life I do international economics, and crises is one of my things. I actually invented currency crises, not the thing but the academic field, 24 years ago. I'm kind of used to what the numbers look like for countries that are on the verge of a breakdown, and you look at a couple of numbers. You look at how big is the deficit relative to the economy – the budget deficit. You look at trade deficits – you say how big is the trade deficit relative to the economy? If you look at the United States, guess what? Our numbers are fully world-class for that. We have a budget deficit and a trade deficit as a share of the economy both that are bigger than Argentina before the 2001 meltdown or Indonesia before the 1997 meltdown.
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