It’s getting too hot for clear thinking

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January 20, 2018 by AK

President Trump has given a Fake News award to Professor Paul Krugman, which I find both unfair and inordinately amusing. It’s unfair because Krugman is not a news reporter but a columnist and sometime economist. Since winning the Nobel prize in economics in 2008, he seems to have focused his efforts on blogging and columning at the New York Times. The title of his blog is “The conscience of a liberal,” not “Advice from an economist,” but occasionally he does share his views on the economy. Right after Trump’s election, Prof. Krugman wrote:

…If the question is when markets will recover, a first-pass answer is never…

So we are very probably looking at a global recession, with no end in sight. I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened.

The Dow Jones Industrial Average (DJIA) index is about 40% higher now than on Nov. 8, 2016. Not a bad return in just fifteen months. Of course the stock market may crash and will certainly correct downwards at some point, and a global recession might very well be in the works. At this moment, however, Prof. Krugman’s forecast is a delight to be savored while the rally lasts.

His doomsaying blog entry, published at 12:42 AM ET on Nov. 9, 2016, begins:

It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?

For the most part, the markets merely hiccuped, as it turned out soon. The DJIA grew for seven consecutive trading days from Nov. 7 to Nov. 15. At any rate, the stock exchanges in New York and London were closed when Krugman uploaded his post. So why the rush to judgment? Let’s read the first three paragraphs as they were published, in succession:

It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?

Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.

Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.

Now it’s much clearer: Trump’s victory was the end of the world. Not metaphorically but almost literally – with Trump in the White House, the planet would perish in a global-warming Gehenna. If the end is nigh, the “economic ramifications” deserve to be “way down” one’s “list of things to fear.”


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