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Home Publications Blogs Beat the Press Robert Samuelson Has Never Heard of Paul Krugman (or Me)

Robert Samuelson Has Never Heard of Paul Krugman (or Me)

Sunday, 22 April 2012 23:33

Regular readers of the Washington Post know that they have a hard time getting information at the newspaper, buried as it is in the center of the national's capital. Robert Samuelson gave more evidence of this problem in his column today on the renewed difficulties facing Spain.

Samuelson told readers:

"in truth, no one has a neat solution to end Europe’s financial nightmare."

Actually, many of us have proposed what would seem like a pretty neat solution, have the European Central Bank guarantee Spain's debt. That would immediately push the interest rates paid by the Spanish government down to the levels paid by the German government. That would make Spain's debt burden easily sustainable.

Spain does need to re-establish its competitiveness which can best be done within the euro zone by having a somewhat higher rate of inflation in Germany and other core countries. If Spain can sustain a lower rate of inflation than the core countries then it will be able to get its current account deficit with other euro zone nations back to a reasonably level.

Samuelson should know that many prominent economists have advocated this sort of solution. He may think it is a bad option for some reason, but then he should present the reason. As it stands, his column makes it sound as though he has no clue on the nature of the debate over euro zone policy.

Comments (12)Add Comment
Another Neat Solution
written by Paul, April 23, 2012 5:37
Increase consumption and demand for Spanish production of goods and services, just like Keynes recommended. Why are these concepts so difficult for the right to understand?

Oh right, their ideological blindness.
written by Procopius, April 23, 2012 6:28
I suppose I could look on Wikipedia, if I hadn't heard recent stories about false information entered in Wikipedia, but can anyone tell me if it is true that Mr. Samuelson majored in Art History? He doesn't seem to be very knowledgeable about economic, financial, or business matters, or, for that matter, current affairs, political science, middle school civics, or general history. Does anybody know what is his relation to the Graham family that they continue to pay him large sums of money?
Ah, but look at the goodvolks an’ tankthinkers
written by JHM, April 23, 2012 7:08
Citizen Samuelson *has* heard of, like "Jeffrey Anderson of the Institute of International Finance." Or "economist Desmond Lachman of the American Enterprise Institute."

Best of all, almost too good to be believed, is "economist Jacob Funk Kirkegaard of the Peterson Institute."

¡Enough to keep one merry for a week, JFK (no relation) is!

Happy days.
written by skeptonomist, April 23, 2012 9:28
Samuelson is actually more sensible than usual in this column - he correctly attributes Spain's problems to its huge housing bubble rather than excess social spending. And he is right that there is no simple solution in the real international political climate of Europe; he specifically discusses the possibility of loans or guarantees thereof from the ECB and other countries. The reason this is resisted by other countries (but may ultimately be accepted) is that they don't want to pay for Spain's problems, even though foreign capital contributed to the bubble.

Sorry, there is no reason to assume that central banks can rescue national or international economies once they have been devasted by a financial collapse. Overconfidence in the ability of monetary policy to fix things after they have been broken is probably one reason that financial regulation was removed or not applied.
written by sherparick, April 23, 2012 11:53
I guess the primary reasson the ECB gives for not doing this is 1) the Maastricht Treaty seems to forbid it from acting a lender of last resort to member countries 2) fear that it would be iflationary 3 )fear it would create "moral hazard" among EU countries not Germany to run up their public debts (although fear of guaranteeing financial bondholders on their bank investments might create moral hazard does not seem to create the same concern). Also, an unofficial reason, fear of causing Angela Merkel and the all the Germans in the Finance Ministray and the Bundesbank to suffer mass apolexy. Not saying these are good reasons, but they appear to be both the articulated and unarticulated reasons.
written by sherparick, April 23, 2012 12:13
Although you, Rortybomb, and Angry Bear have been beating this drum for ages, perhaps the Post will finall be embarrassed when the CSJR eviserates them on their biased fact-free coverage of social security and the deficit. http://www.cjr.org/campaign_de...p?page=all
baises we all have
written by mel in oregon, April 23, 2012 4:05
i don't think it's faulty info so much at wikipedia as biases by anyone writing on anything. after all look at a 1950 or 1900 encyclopedia, it treats "facts" a lot differently than we do today. as for mr samuelson, he does seem to often display a lack of awareness of views contrary to his own.
Another wapo bowles-simpson plan?
written by David, April 23, 2012 5:46
[url= http://www.washingtonpost.com/...ory_1.html

What is this "plan" the "committee" "arrived at?"

About Samuelson, he also never heard Richard Koo's solution, either
written by David, April 23, 2012 5:51
written by Stephen, April 23, 2012 8:25
I'm sure you'll get to this:
Vítor Gaspar, the finance minister of Portugal, said in an interview that his country — under a previous government — made a mistake when it responded to a downturn in 2008 by pumping money into the economy. The result, he said, was a deeper debt problem without creation of any lasting growth.

“My country definitely provides a cautionary tale that shows that, in some instances, short-run expansionary policies can be counterproductive,” Mr. Gaspar said.
Samuelson Conservative Econohack
written by mainmati, April 23, 2012 9:13
Folks, Samuelson has been an unimaginative conservative economic hack journo for more than 30 years. He has no solutions besides the formulaic Republican formula of no taxes, no regulations. He's a total bore and best not to pay attention to him.
Giant Pink Elephant
written by The Tim Channel, April 24, 2012 3:42
I tell all my European neighbors to be wary of the US banksters coming in and ruining their economies so they can buy up European homelands for pennies on the dollar using US currency printed up in the basement of the White House. They listen. Enjoy.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.