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Krugman Rising From The Deep

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Nowadays, I rarely bother to criticize, let alone advise, Obama (OK, I did it on Syria).

The One has become insignificant, it does not matter what he thinks, supposing he thinks at all. (Chuck Hagel, the Defense Secretary just called the policy of the USA in Syria strategically compromised, long term, as it profits the other enemy of civilization, Assad. Hagel is right. Attacking ISIL without taking out Assad is unbalanced. I am sure another Christain, or Druze strongman can be found.)

Soon the entire Congress will be Republican, and the Obama groupies will wonder what happened. Well, they have only themselves, and their reveling, to blame.

What happened is that, while Obama adulators were celebrating, when Obama became president he got surrounded by a thick cloud of plutocrats and their servants. Thus all Obama’s policies were all plutocratic, including (most of) Obamacare.

Unfortunately, the so called “Democrats” were not brainy enough to realize this. They believed that their beige hero would save them all. And, besides, superman like, find a solution to everything.

And, even if “Democrats” had brains, they had neither theory, nor a plan on how to handle the world.

The same problem has arisen with Clinton, Bill, earlier, and with the dimwits of the Socialist Party in power (supposedly) in France: no progress whatsoever.

I can’t reproach right wingers such as Cameron, or Merkel to be right wing. Even Abe in Japan does what he said he would do.

But the left, in Europe and the rest of the West has long been derelict.

Why? How? Lack of correct ideas. They did not think it through.

The best Krugman could suggest, for years, was more money for kleptocratic banks (“QE”), or devaluation (as Abe is doing in Japan). Fortunately, at last, Krugman is changing. As he is the most followed political economist in the world, it matters. Polls in Europe showed that the (Ex(?)-Europhobic Krugman) is the most trusted voice. On the left!

Then, of course, it all makes sense: if Krugman, the most trusted voice on the left, was actually on the right, or nowhere in particular, then no wonder the left was a right, and civilization got off the rails.

Krugman is realizing, slowly, that the debate has been framed by the plutocracy, especially about the lack of investments.

So now Krugman realizes that he and his kind (ex-Fed chief Bernanke) owe apologies to Japan. Says he:

TOKYO – For almost two decades, Japan has been held up as a cautionary tale, an object lesson on how not to run an advanced economy. After all, the island nation is the rising superpower that stumbled. One day, it seemed, it was on the road to high-tech domination of the world economy; the next it was suffering from seemingly endless stagnation and deflation. And Western economists were scathing in their criticisms of Japanese policy.

I was one of those critics; Ben Bernanke, who went on to become chairman of the Federal Reserve, was another. And these days, I often find myself thinking that we ought to apologize.”

Well, indeed, you should: to keep its economy up, the Japanese government engaged in a gigantic effort (its debt is now 240% of GDP. Slightly more than the 90% of Britain or France).

And Krugman to diagnose: “. the West has, in fact, fallen into a slump similar to Japan’s – but worse. And that wasn’t supposed to happen. In the 1990s, we assumed that if the United States or Western Europe found themselves facing anything like Japan’s problems, we would respond much more effectively than the Japanese had. But we didn’t, even though we had Japan’s experience to guide us. On the contrary, Western policies since 2008 have been so inadequate if not actively counterproductive that Japan’s failings seem minor in comparison. And Western workers have experienced a level of suffering that Japan has managed to avoid.”

If it were only workers! Grandmothers and everybody not a banker or hedge fund managers also suffered from Quantitative Easing (which brought savings’ interest down to zero).

So what happened? Krugman again:

”What policy failures am I talking about? Start with government spending. Everyone knows that in the early 1990s Japan tried to boost its economy with a surge in public investment; it’s less well-known that public investment fell rapidly after 1996 even as the government raised taxes, undermining progress toward recovery. This was a big mistake, but it pales by comparison with Europe’s hugely destructive austerity policies, or the collapse in infrastructure spending in the United States after 2010. Japanese fiscal policy didn’t do enough to help growth; Western fiscal policy actively destroyed growth.”

And Krugman to evoke the austerity mistake even in Sweden, and to conclude:

“I’ll be writing more soon about what’s happening in Japan now, and the new lessons the West should be learning. For now, here’s what you should know: Japan used to be a cautionary tale, but the rest of us have messed up so badly that it almost looks like a role model instead.”

I added the following in a comment:

The case of Japan is special: it has collapsing demographics, not compensated, as it is in many Western countries, by a vigorous immigration. Japan also has no indigenous energy to speak of (even its nuclear waste recycling long depended upon France).

It was long obvious to yours truly, that the conditions we are in are worse than in 1930s. The Great Depression of the 1930s happened mostly accidentally; it was a succession of obvious mistakes: a boom, followed by a crash, made worse by a tariffs war, leading to industrial shrinkage, and a liquidation of banks.

Nowadays, it’s different: the planet is crashing, a more serious problem. This could be stopped, but for that the general mindset would have to be different. However, said mindset is constructed by an ever more powerful plutocracy, a few hundred individuals who order the world around.

In particular, the plutocratic mindset has seized the financial sector and the government. The former does not need the public to make money: the financial sector has tricks such as Quantitative Easing up its sleeve, boosted by the continual authorization for banks to cooperate with, or engage in financial piracy.

The latter, the government, refuses to engage in massive public investment, from top notch free public schools, to massive infrastructure to massive public healthcare (if you brandish Obamacare, contemplate its deductibles). Simply because, as a proximal reason, if government goons hold that line, cushy jobs are for them to take when they come out of government.

The way it connects with the financial pirates is simple: money creation is a zero sum game, when pushed to the max. If more money went to the real economy, it would be as much not going to the financial pirates.

Krugman, and his eminent colleagues have not understood this yet, that all the money created for financial thugs, is as much not going for vaccine research, schools, bridges, healthcare, etc. Hopefully, they will, some day. Before that day, do not expect progressive polices to bear fruit, or, even, to exist.

The media, everywhere, is little better than FOX News: it’s a giant propaganda machine which has interest to make the rich richer, and the poor, stupider.

Plutocracy is the metastatic cancer which has invaded, paralyzed all the minds. Before a stunted economy, and decaying society, we are confronted to decomposed minds. And mostly on the left. The right, at least, the plutocratic right, knows how to take care of its own.

Patrice Ayme

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