Must listen: Paul Krugman on financial crisis -- in 2007

...and frighteningly accurate. When he was discussing the hypotheticals he said something to the effect of not really seeing a fix in a meltdown scenario so I'm wondering how much of that outlook still holds. He also didn't seem to emphasize the Credit Default Swaps or CDSs that everyone is talking about now. I wonder if the scope of the CDS problem wasn't yet understood in December (which is likely since no one seems to know even now where all these CDSs are and who's in it for how much) or if the problem has been exacerbated that much since December (also likely). Oh hell, I think I just figured that one out on my own -- why bother emphasizing CDSs since if it gets to that point you've already reached meltdown?! Eeeeeek!

I know he's indicated in his column and blog that he thinks the upcoming major bailout *can* work to some degree if it's aimed to address the problem systemically and handled carefully but I always factor in a certain amount of required optimism whenever an economist speaks publicly, particularly in print, on an economic issue. I'd love to hear him and a few others talk on the bail out completely unfiltered.

And another thing, he seemed to think (in the vid) that regulating all this was a pipe dream that needed to be done but wouldn't happen -- I wonder if we'll get those regulations now? Is this the meltdown we needed to go after these shadow banks, bank-like financial thingamajigs, and predatory lenders?

PB 2.0 - Supplement the wonk!

before this slides off the front page, where it ought to be stickied and used as a filter instead of the captcha - no more posting until you listen to the whole thing and take pass a quiz.

Two things leap out of this for me, and I haven't seen anything more recent from Krugman to contradict them. First, nobody understands what is happening here because it has never happened before and second, the fundamental underpinning for the problem, the exploding epidemic of negative net worth among the working class, cannot be dealt with for political reasons - many political reasons to be sure, but all political nonetheless.

In this environment we see the anti-big government Republicans embracing the largest expansion of government since the New Deal and this may be just the beginning; we see the free-market Republicans engaging in the biggest intervention in and diminishment of free-market economics since WWII, and this my be just the beginning; and we see the balanced-budget Republicans spending like a drunken sailor on shore leave could only dream of doing.

Of course there are hidden agendas for the Corporatists, who will use this period of taxpayer-supported false stability to suck the last few drops of blood out of the dying public corpus before discarding the dried husk and looking for other sources upon which to feed, but these actions once and for all expose the Republican-supporting hard-core 33% of Americans and their additional 17-18% of casual allies for what they really are.

Those who have supported Republican candidates and Republican policies for the last 40 years may have done so for a variety of reasons including conservative views on the role of government but that cause is now stripped away and shown to be the sham it always was. Supporting Republicans now means supporting massive government control, massive government expansion, unlimited government expenditures, and increasing authoritarianism - on those issues there is no longer any pretense upon which to debate.

Those who continue to support Republican policies and Republican candidates in the face of such naked truths do so for two reasons and two alone - they are bigots, and they are cowards. Both of them disgust me.

One additional thought. Given that nobody knows exactly what to do, and that the simple support of the working class is something that will not soon occur, I find it actually comforting that Obama and his crew have decided to think things over for a few days before announcing any big plans. In comparison to BushCo, leaping to steal taxpayer money in order to protect the ability of the wealthy to extract the last dregs of maney from the working class, or McCain blathering absurdly in one direction one day and the exact opposite the next, an approach of sitting back for a bit and making a measured sophisticated assessment is to my mind entirely refreshing.

To see a careful, cautious, considered approach castigated by some here at Corrente is, well, disappointing. I prefer my Presidents to be thoughtful, cautious, well-considered and deliberate in their decision-making, even if they turn out to sometimes be wrong.

[As an aside, could someone please send Krugman a Corrente PB2.0 pocket protector before that pen makes an embarrassing blot on his nice new dress shirt? This is the first time I've heard him speak at length. How perfectly charming he is; everything one could want in a professor, small "p" intentional.]