Dean Baker's Blog, page 462

WAPO Still Blames Euro Zone Crisis on Deficits

It must be very hard to get news at Fox on 15th Street. In the Post's little primer giving "steps of the euro crisis" step number 3 tells us about the end of cheap credit:

"Following the U.S. credit crisis in 2008, Greece reported a huge deficit increase that suddenly made investors worried about its ability to pay back its loans. High deficits in Portugal, Spain and Ireland caused the price of credit to rise in those countries as well."

This is an interesting story, but it left out an import...

The Washington Post Again Touts Non-Existent Boom in Mexico

As noted previously, the Washington Post has a huge stake in saying that NAFTA was a success. As a result, it simply cannot honestly discuss the state of Mexico's economy in either its news or opinion pages. Today it has a piece that is headlined on the main page of its web site as "Mexico's middle class begins to boom." Readers would never know that Mexico has had the worst growth record in all of Latin America over the last decade.

Since the Post seems intent on recycling misleading news st...

NYT Says That China's Economists Are As Corrupt As U.S. Economists

Given the failure of the economics profession to see the economic crisis coming or to devise an effective path forward, many people have come to question its competence and/or integrity. Somehow its assessments often seem to favor the rich.

For example, economists can be counted on to get really hot under the collar over a 20-30 percent tariff barrier that is designed to temporarily protect manufacturing workers, but don't even notice that patent protection for prescription drugs raises their...

The NYT Can't Find Credible Columnists, so They Hired Bill Keller

I guess it's childish name-calling time at the NYT. Hence Bill Keller tells readers that if you ask any "credible economist" you will get Keller's preferred solution to the budget. At the top of the list is "entitlement reforms."

For those who don't know, "entitlement reforms" is Washington elite speak for cuts to Social Security and Medicare. They know that these programs are hugely popular, so the Washington elite crew use their little code word "entitlements," since they know that "entitle...

The One Percent Want Your Social Security and Medicare and Steven Pearlstein Is Trying to Help

Steven Pearlstein, the Washington Post business columnist, often writes insightful pieces on the economy, not today. The thrust of his piece is that we all should be hopeful that a group of incredibly rich CEOs can engineer a coup.

While the rest of us are wasting our time worrying about whether Barack Obama or Mitt Romney are sitting in the White House the next four years, Pearlstein tells us (approvingly) that these honchos are scurrying through back rooms in Washington trying to carve out...

Picking on Paul Krugman: Conservatives Have No Problem With Big Government

I don't often disagree with Paul Krugman these days but I do have to take him to task for buying into the "conservatives don't like government" line. In a blogpost he notes that a Republican health care bill in the House would take away funding for the Agency for Healthcare Research and Quality and any economic research funded by the National Institutes of Health. He then concludes by commenting:

"You sometimes hear conservatives saying that the role of government should be limited to the pro...

Are German Officials Really As Clueless About Economics as the Washington Post Says?

A Washington Post piece on German attitudes towards the crisis in the euro zone at one refers to the high borrowing costs in Spain and Italy. It then tells readers:

"But in Germany’s view, yields on Spanish bonds — just above 7 percent as of Friday — are indeed with precedent, since Spain borrowed at rates well above 8 percent for most of the 1990s, touching 14 percent at one point. Italy had even higher borrowing costs than Spain in the 1990s."

While the piece later notes that "many economis...

When Pension Fund Managers Can't Do Arithmetic

There are good paying jobs for unskilled people managing pension funds. Floyd Norris reports on how these folks, who get 6-figure salaries, expected to get 8 percent returns even when the price to trend earnings ratio in the stock market exceeded 20 and even 30.

People who know arithmetic could have explained to these managers that this would not be possible. Today many of these pensions are seriously underfunded.

The Reason God Created Central Banks

Matt Yglesias notes the housing bubble in Canada and then asks what the Canadian government could do about the bubble. His point is that it would be enormously unpopular if the government deliberately took steps to burst the bubble.

This is of course true and it is one reason why the government should have acted years earlier to prevent the bubble from getting as large as it did. However there is another actor that doesn't appear in Matt's story, the Bank of Canada. The official story on cent...

Charles Krauthammer Doesn't Know Left from Right

Actually, he just gives the right-wing caricature of the left, telling readers:

"The argument between left and right is about what you do beyond infrastructure. It’s about transfer payments and redistributionist taxation, about geometrically expanding entitlements, about tax breaks and subsidies to induce actions pleasing to central planners."

The real difference is not over government intervvention in the market. The right actually supports massive government interventions in the economy. Fo...