[lbo-talk] What Is The Consensus On Krugman's Analyses?

[Christian Gregory]

>"What we have here is a form of looting."  So says
George Akerlof, a Nobel laureate in economics, of the
Bush administration's budget policies — and he's
right. With startling speed, we've blown right through
the usual concerns about budget deficits — about their
effects on interest rates and economic growth — and
into a range where the very solvency of the federal
government is at stake. Almost every expert not on the
administration's payroll now sees budget deficits
equal to about a quarter of government spending for
the next decade, and getting worse after that.

Bob Pollin makes this point better in his new book, because he emphasizes that it's the nature of spending that matters. K's going over the top on the solvency bit-- if all levels of gov't are really on the brink of insolvency (as opposed to having a temporary liquidity problem), then the world as you and I know is really about to end. What seems to be true is that the Repug's program to run the state into the ground will make life noticeably worse for the middle and lower classes in the short and medium run. A Latin-American style financial crisis would require that the US were in a political position with respect to its creditors like Latin America was in the 1990's. And that isn't about to happen, yet. 

Christian