It must be depressing to be Paul Krugman. No matter how well the economy performs, Krugman’s bitter vendetta against the Bush administration requires him to hunt for the black lining in a sky full of silvery clouds. With the economy now booming, what can Krugman possibly have to complain about? In today’s column, titled That Hissing Sound, Krugman says there is a housing bubble, and it’s about to burst:
Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn’t have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?
Now we’re starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone – not just those who own Zoned Zone real estate – should be worried.
Well, if we believed anything Krugman writes, we’d be worried all the time. Or at least until we have a Democratic administration, when everything will be rosy again. Krugman’s description of the housing bubble is amusing for what it reveals about how Krugman views the country:
When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone.
In Flatland, which occupies the middle of the country, it’s easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don’t really have traditional downtowns [Ed.: Huh? I don't think Krugman gets out here much.], just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can’t even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions – hence “zoned” – makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up. And if people think that prices will continue to rise, they become willing to spend even more, driving prices still higher, and so on. In other words, the Zoned Zone is prone to housing bubbles.
I don’t doubt that some people in places like San Francisco and San Diego have paid too much for their houses. But it isn’t clear, and Krugman doesn’t even try to explain, why that constitutes a bubble or why level or declining home prices in selected areas around the country will somehow imperil the economy. Here are Krugman’s reasons for claiming that a housing bubble exists:
One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller “Dow 36,000″ are now among the most vocal proponents of the view that there is no housing bubble.
There are, of course, obvious differences between houses and stocks. Most people own only one house at a time, and transaction costs make it impractical to buy and sell houses the way you buy and sell stocks. Krugman thinks the fact that James Glassman doesn’t buy the bubble theory is evidence in its favor, but if you read Glassman’s article on the subject, you’ll see that he actually makes some of the same points that Krugman does. But he argues, persuasively in my view, that there is little reason to fear a catastrophic collapse in home prices.
Krugman will have to come up with something much better, I think, to cause many others to share his pessimism.
UPDATE: The contemptible Paul Krugman attacked me again in his Times blog this morning. So I went back through our archives to retrieve some of our posts that explain why Krugman continues, after all these years, to be obsessed with us. Then I did a post, titled “Why Paul Krugman Doesn’t Like Us. And Vice Versa.” It is a good reminder of how dishonest and lazy Krugman has been over the years. Here it is:
Paul Krugman attacked me this morning, more or less out of the blue. His attack–or attempted attack, anyway–consisted of a quote from a post I wrote in 2005, and a link to another post that I also wrote in 2005. Mr. Krugman, apparently, is a man with a long memory. He says that I am “best known” for those two posts, which would come as a surprise to those who have been reading our site for the last seven years. A year or two ago, equally out of the blue, he launched a similar attack linking to the second of the two posts, for no obvious reason.
I will get to those posts in a moment, but the more interesting question is, what is the source of Krugman’s animus? After all, we have not written much about him in recent years. But Krugman hasn’t forgotten the fact that, dating back to the early days of this site, we have repeatedly documented his misrepresentations, his misleading omissions, his outright lies, and his hysterical fabrications. Just for fun, I searched our archives earlier today to identify some of our Krugman posts. Not all of our archives have successfully made the trip from one database to another, so it isn’t possible to recover them all, but there are plenty to get a sense of what a deceptive and inept commentator Krugman is.
Let’s start with the fact that Daniel Okrent, former Public Editor of the New York Times, publicly expressed his frustration with Krugman’s dishonesty and his resistance to correcting the many errors in his columns. Okrent criticized Krugman for “the unfair use of statistics, the misleading representation of opposing positions, and the conscious withholding of contrary data.”
Okrent also wrote:
Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults.
Many of those “substantive assaults” came from us. Here is a partial selection:
In Krugman Goes Around the Bend, I pointed out the absurdity of Krugman’s equating a group of country music fans destroying their own copies of Dixie Chicks CDs to Kristallnacht.
In The Paul Krugman Truth Squad, Paul linked to a post by Donald Luskin that showed that Krugman had dishonestly attacked the Bush tax cuts by comparing a single year’s salary in a newly-created job against the ten-year cost of the tax cuts that created that job.
In Krugman the Barbarian, I critiqued Krugman’s attack on Arnold Schwarzenegger, in which Krugman asserted that California’s taxes are “now probably below average.” Probably? He evidently was too lazy to look up the data–laziness is a frequent issue with Krugman–which showed that Californians then had the 8th-highest tax burden of the 50 states.
In Poor Paul Krugman, I noted that, contrary to Krugman’s characterization of Wesley Clark’s views–Clark was Krugman’s candidate of the moment–Clark had testified under oath that Saddam Hussein “has chemical and biological weapons.”
In Krugman On Civility, I ridiculed Krugman’s claim that the invasion of Iraq in March 2003 caused Osama bin Laden’s escape at Tora Bora in December 2001.
In Krugman Descends Further, I noted that, while Krugman had repeatedly criticized Republicans for being “uncivil,” the U.K. cover his book The Great Unraveling depicted President Bush as Frankenstein’s monster, and Dick Cheney as Hitler. (Some things never change, do they?)
In Paul Krugman’s Credibility Recession, I showed that Krugman’s claims about current unemployment data were false. This was another case of Krugman making blithe (but fictitious) assertions about the unemployment numbers, assuming that no one would take the trouble to look them up.
In That Was Then, This Is Now, I pointed out that Krugman had written disapprovingly about Enron without disclosing that he was a paid Enron adviser who, when he was cashing Enron’s checks, did nothing about the supposed abuses that were the subject of his column.
In Ducks In A Barrel, we linked to a Donald Luskin column that showed how Krugman had misrepresented economic data to mislead his readers with respect to the Reagan administration’s record on taxes and the economy.
In Paul Krugman, Around the Bend, I called Krugman on his false statements about Florida’s Governor Jeb Bush.
In Krugmania, I pointed out that Krugman’s hysterical claim that President Bush stole the 2004 election in Ohio was based on false statements of fact that were easily demolished–if, that is, one actually does research instead of parroting goofy left-wing blogs, as Krugman so often does.
In Krugmania, Continued, I demonstrated that Krugman lied–once again, uncritically repeating a baseless claim on a left-wing blog–with respect to the Navy’s performance in the aftermath of Hurricane Katrina.
In Deja Vu, I exposed another example of Krugman’s misleading characterization of economic data to draw a conclusion that was the opposite of the truth.
In Krugman Flails Wildly, Misses, I cataloged falsehoods in a Krugman column about Social Security.
In Krugman vs. Krugman, I pointed out that Krugman denounced, in his column, the idea that extending unemployment benefits can prolong unemployment as a “bizarre point of view,” while in fact his own textbook, Macroeconomics, makes precisely that point.
In Krugman Embarrasses Himself, Again, I criticized Krugman for fabricating a quote that he attributed to Newt Gingrich, which led to a red-faced correction in the Times.
In Sun Rises in East; Krugman Makes Fool of Himself, I ridiculed Krugman’s criticism of Republicans for using “eliminationist rhetoric,” i.e.–I’m not kidding!–”Fire Nancy Pelosi,” when Krugman himself wrote, to take just one of many examples: “A message to progressives: By all means, hang Senator Joe Lieberman in effigy.”
In Paul Krugman, Buffoon, I criticized Krugman for blaming Michele Bachmann for Jared Loughner’s murders, based on a false account of what Michele said in an interview with me.
In Paul Krugman, Punch Line, we posted a video of a room full of people bursting out in laughter when they learn that Krugman is the source for a liberal’s crackpot claim.
In Iowahawk vs. Krugman, we linked to Iowahawk’s dissection of yet another attempt by Krugman to lie with statistics, this time on education.
In Liberals: Wrong Again, Do They Care? I ripped Krugman’s baseless claim, which turned out to be entirely false, that Koch Industries stood to benefit from the sale of a handful of small, antiquated power plants in Wisconsin. This was one of countless examples of where Krugman repeated outlandish claims made on far-left web sites as though they were Gospel, without doing any investigation to determine whether they had merit, or, as in this case, were obvious fantasies.
So that is a sampling, at least, of what we have on Krugman. What does he have on us? Well, nothing in the last seven years. But what about those two posts from 2005?
The first is a paragraph taken from this post, to which Krugman didn’t link. I wonder why? Here is the paragraph Krugman quotes, which left-wingers have chewed over, in their uniquely oblivious way, for years:
It must be very strange to be President Bush. A man of extraordinary vision and brilliance approaching to genius, he can’t get anyone to notice. He is like a great painter or musician who is ahead of his time, and who unveils one masterpiece after another to a reception that, when not bored, is hostile.
Now, is that over the top? Of course! Do you see the tongue planted in the cheek, the twinkling eye? You are probably smart enough to understand that I was using the ancient rhetorical device of hyperbole, but liberals like Krugman are too blind to nuance of any kind to catch on. Of course, I left a clue for them: the very next words of the post, after those quoted by Krugman, are “Hyperbolic? Well, maybe.” You should read the post; it is a good one, about an excellent initiative of the Bush administration in the environmental field. To my knowledge, no liberal has ever tried to rebut the substance of the post. In keeping with his usual laziness, I don’t suppose Krugman ever has read it.
Oh, and, by the way: if the point of quoting that single paragraph is to suggest that I was an uncritical fan of President Bush, the liberals should read the rest of the dozens or hundreds of posts that I wrote about Bush and his administration between 2002 and 2009. Like the one on immigration, where I wrote, “He had his chance and he blew it.”
The second post, which Krugman does link to, concerns home prices. At that time (August 2005), the economy was doing very well, and, given that we had a Republican in the White House, Krugman was doing his best to convince his readers that the sky was falling, notwithstanding very strong economic data. He was wrong nearly all the time, but he turned out to find the proverbial acorn when he wrote that we were then experiencing a housing bubble. My own take on the subject was restrained: “[Glassman] argues, persuasively in my view, that there is little reason to fear a catastrophic collapse in home prices.” That’s it. I, along with around seven billion other people, failed to foresee that there would indeed be a catastrophic decline in home prices, and that the result would be a financial and stock market collapse, followed by a recession. Of course, Krugman didn’t foresee all of that either. Worse, neither did my broker.
But failing to foretell the future is far different from lying about the past and the present. If Krugman’s errors were limited to a wrong prediction or two, we never would have needed a Krugman Truth Squad, nor would we have written dozens of posts chronicling Krugman’s lies, errors, misleading uses of data, and hysterical, unfounded smears against his political opponents.
So now you know why we don’t like Paul Krugman, and why he doesn’t like us.
UPDATE: Dan Mitchell writes to remind me that Krugman actually argued in favor of a housing bubble:
To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Hilarious. And this is what Krugman described as one of his finest hours!
FURTHER UPDATE on March 19, 2013: Wow. I see Krugman is at it again, nearly eight years after the fact! It’s time to move on, Paul.