Another Krugman Micks-Up: Irish “Austerity” Brings Recovery

Oh Paulie Krugnuts, you’ve done it again! 

At the Atlantic, Megan McArdle checks in on Nobel laureate Paul Krugman’s dire warnings about the Republic of Ireland’s recession-era decision to slow its growth of public sector debt. Once again, the hysterical New York Times columnist has predicted an Armageddon that failed to happen. 

Krugman has had his Irish up about non-Keynesian “austerity” for some time. As with the “drastic cuts” in government spending we hear about without seeing on this side of the pond, Irish austerity was in fact merely a downward adjustment in the rate of public spending growth, not an actual cut in year-to-year spending, as we can see on page 5 of the Emerald Isle’s 2011 budget summary [pdf]. 

Nevertheless, the show of restraint was enough to make Krugman in March of this year decry “savage austerity measures on ordinary citizens.” In June of 2010, Krugman not only misread the Irish economy but foiled the elasticity expectations of W. B. Yeats’ meter in a blog post with the disgracefully tin-eared title “A Terrible Ugliness Is Born.” That one wept for “virtuous, suffering Ireland,” which was “gaining nothing” from efforts at budget reform – reform that Krugman compared with “bleeding the patient,” who “has nonetheless gotten sicker.”

Now the savage beauty of the terrible austerity has been born, and begorrah! Ireland’s bond yields are dropping rapidly, in spite of Krugman’s sarcastic dismissal of the idea that international debt markets would reward the country for its fiscal restraint. McArdle quotes more good news from the Wall Street Journal

The national statistics office said Thursday gross domestic product in the three months to June was 1.6% higher than in the first quarter and 2.3% higher than in the same period of 2010.

That was the fastest year-to-year expansion since the last three months of 2007, after which Ireland's previously fast-growing economy was felled by the financial crisis and the collapse of a debt-fueled property boom.

The Central Statistics Office also raised its calculation of growth in the first quarter to 1.9% from the previously estimated 1.3%. The growth was broad-based, including manufacturing, agriculture, transport and communications.

A few years ago there was a joke circulating about the difference between Iceland and Ireland: One letter and six months. OK, so it wasn’t the funniest joke of all time, or even of 2008.

But the interesting thing is that these two supposedly catastrophic European economies have recovered to the point that it’s no longer easy to remember which one was supposed to be already in trouble and which one was headed for the cliff. 

In the current issue of Reason you can find my column on Iceland’s recovery. That E.U. non-member had a special advantage built into its recession: Iceland’s financial sector and its central bank were effectively wiped out; its government was unable to enact emergency economic measures; and the country was too small and unaffiliated to be victimized by any “rescue” packages from the international financial community.

'This kind of brute force deleveraging is sadly unavailable within the European Union, but the Irish example shows there is still some advantage to be gained from responsible leadership – provided the leaders are willing to ignore quacks like Paul Krugman, the Doctor.

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  • ||

    Paul Krugman is a shitstain on the underpants of Economics.

    That's pretty much all I've got to say. It's relevant, succinct and about what you all would expect from me anyway. Have a great night or morning, reason! And remember: condoms can break so don't bother wearing them.

  • everyone you know||

    There is a reason we all hate you

  • Leprechaun Fitzsimmons||

    Whenever he got his Irish up,
    Clancy lowered the boom!

  • MissBrooks||

    Dennis?

  • Mike E||

    I can never keep straight which one is Paul Krugman and which one is Thomas Friedman.

  • ||

    Krugman is the one with a butt plug fashioned out of a Nobel...

  • ||

    The surest test for differentiating between Tweedle-Dee and Tweedle-Dum is China; if it isn't in there somewhere, it isn't Friedman. Of course that requires actually reading their columns, which may in this case render ignorance bliss.

  • ||

    For the man with a China everything is flat.

  • ||

    Krugman is the tall Robert Reich.

  • Stop Touching My Anus||

    Paul Krugman,

    I love you. I know you probably don't remember me. I sat behind you in Econ 101 back in college. I remember all the girls said you had the longest cock of any of the boys in class, but I we more drawn to your handsome beard. I wanted you to eat out my pussy so much that I even cried myself to sleep as I ached for it. Don't get me wrong; I'm not a slut. But your insight and your wisdom when it comes to Keynesian stimulus policies and your long cock and beard made me crave your body in ways no sane person would even consider. Please don't think I'm crazy for stalking you for 30 years. Just realize that my body is ready for you should you ever desire it.

    Take care, and with love,
    Stop Touching My Anus

  • The Art-P.O.G.||

    SugarFree is clearly one of the most influential writers of his generation.

  • ||

    There is no corner of the squared circle that is the interwebz bereft of his Saccharin shadow.

  • ||

    "And what rough beast, its hour come round at last,
    Slouches towards Hit and Run to be born?"

  • The Art-P.O.G.||

    Ha ha, perfect, SF.

  • ¢||

    I can never keep straight which one is Paul Krugman and which one is Thomas Friedman.

    Krugman has nuts.

    It's Brooks and Frum I can't tell apart. One of them advertised discreet public handjobs for Senators, and the other one boxered a load staring at Obama's pants. I don't know the handkerchief code for shit that specific.

  • NotSure||

    Only people like Tony and Krugman could believe that investors would reject a country that tackles its debt, and want to prefer a country which states that its rising debt is good for the economy.

  • Mike M.||

    Makes sense, since they're the same fucking person.

  • $6M RoboTorso||

    Semi on topic:

    Ezra Klien discovers govt can never successfully fix the economy, draws totally wrong conclusion.
    ...Perversely, the very size of the package is part of its problem. With something extraordinary that is nevertheless not enough, the economy deteriorates, and the government sees its solutions discredited and its political standing weakened by the worsening economic storm. That keeps it from doing more.

    Meanwhile, the opposition’s capacity to do more is arguably even more limited, as it has turned against whatever policies were tried in the first place. Add in the almost inevitable run-up in government debt, which imposes constraints in the eyes of the voters and, in some cases, in the eyes of the markets, and an economy that started by not doing enough is never able to get in front of the crisis.

    These sorts of economic crises are, in other words, inherently politically destabilizing, and that makes a sufficient response, at least in a democracy, nearly impossible....

    ...In general, the policies that are vastly better than whatever you are doing are not politically achievable, and the policies that are politically achievable are not vastly better....

  • Mike M.||

    Shorter Klein: "Even though we can't prove it, we're right because we say we are."

  • $6M RoboTorso||

    Everyone get your monocles on straight:

    Krugnuts: Panic of the Plutocrats
    ...And this reaction tells you something important — namely, that the extremists threatening American values are what F.D.R. called “economic royalists,” not the people camping in Zuccotti Park.

    Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations, which have involved some confrontations with the police — confrontations that seem to have involved a lot of police overreaction — but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009....

  • The Art-P.O.G.||

    Wow, I didn't see that take coming. Not from a partisan like Krugman.

  • ||

    Did you really, really need to post that? I don't mind the link so much, but doesn't including a chunk of the text amount to intentional infliction of emotional distress? Have you no shame? Having managed to avoid following the 20 or so links to that particular piece of rancidity posted by idiot friends on facebook, all of whom have been positively fuming at comparisons to the Tea Party, I came back to H&R with the expectation of safety, at least here in the comment threads.

    These have been a particularly traumatic few weeks on facebook for those of us whose high-school friends were apparently all absorbed by the Borg at some point in the last decade or three. Who knew it was possible to develop a pathological fear and hatred of the seemingly innocuous word occupy? To be haunted by the dread of going to facebook for a message from one of your kids only to be assaulted by the word in every link, every photo, every status update? By now I'm pretty fucking close to the breaking point, and I don't think I'm the only one.

    So the really funny part? I'm the one who has been defriended by three people in the last week for posting mildly phrased-- truly, almost apologetic-- dissenting comments on their hysterical anti-capitalist raving. But I guess that's just part of the process by which consensus decisions are reached, no?

  • SIV||

    A Wallace quote should help clear out your surplus facebook "friends".

    "The only 4-letter words these hippies don't know are W-O-R-K and S-O-A-P"

  • ||

    Heh. And just like me, they're all old enough to remember that quote and who it came from. It'd scare 'em off faster than the word "libertarian" does, because they seem to halfway think I'm just fucking with them by calling myself that.

  • ||

    In the latest news on the Euro Death March: A faction in the ruling Slovak government has come to the conclusion that more debt doesn't fix a debt crisis. So the whole edifice now teeters on the edge of the abyss.
    Spiegal has a snarky interview with the party leader:

    http://www.zerohedge.com/news/.....und-itself

  • $6M RoboTorso||

    Euro Death March

    Fucking European tea bagging anti govt extremists cause all this w/ their fear of centralization.

  • $6M RoboTorso||

    And "Euro Death March" will be the first track on my prog metal album. Not worthy of album title or group name consideration.

  • Spoonman.||

    That Sulik man is a huge badass. Seriously:

    SPIEGEL ONLINE: Nevertheless, banks could run into significant problems should they be forced to write down billions in sovereign bond holdings.

    Sulik: So what? They took on too much risk. That one might go broke as a consequence of bad decisions is just part of the market economy. Of course, states have to protect the savings of their populations. But that's much cheaper than bailing banks out. And that, in turn, is much cheaper than bailing entire states out.

    This random Slovakian dude for president of the world.

  • Spoonman.||

    Also, this, about the party he founded, from WP:

    SaS is notably civil libertarian, being the only major party to campaign for same-sex marriage or for the decriminalisation of cannabis.
  • ||

    I like him. He answers questions without BS.

  • Veemee Sashimi||

    Sulik is deadly wielding a Super Sledge Hammer.

  • cynical||

    Grampy Bone likes this.

  • ||

    "Spiegal: But, at the same time, you've had what might be considered an ideal European career. When you were 12, you came to Germany and attended school and university here. After the Cold War ended, you returned home to help build up your homeland. Do you care nothing about European solidarity?"

    Warren alert!

  • NotSure||

    Spiegel is the German equivalent to the New York Times, a famous name, respected but utterly left wing. They have no shame that their journalist gets into a political argument with a politician who opposes their world view.

    What must have really silenced the journalist was when Sulik raised the fact that the Slovaks will need to raise taxes to pay for the pensions of Greece that are 3 times the amount of Slovakian workers pensions.

  • ||

    Yeah, they are more lefty than NYT I think.

  • Ted S.||

    Sulik gave the wrong answer to this question. He should have told the interviewer that this "solidarity" was in fact only the solidarity of the Brussels class of political and media elites, and that the Brussels class was showing no solidarity with the people.

  • Old Man With Candy||

    Isn't that Robert Reich in the first picture?

  • DJF||

    Yes, people often don't recognize him when he wears his crown.

  • ||

    Well, the xtra large cup o' whiskey (for his leprechaunesque stature) tends to give him away ...

  • Almanian||

    This is today's Dog Bites Man Cop Shoots Dog story, isn't it?

  • ||

    No matter how wrong he is, no matter how much money he took from Enron, the only thing that could get Krugman fired at this point would be if he supported a Republican...

  • ||

    the country was too small and unaffiliated to be victimized by any “rescue” packages from the international financial community.

    It really confuses the "You're just not hitting it hard enough!" narrative if the guys who aren't hitting it at all come out of their nosedive first.

  • IceTrey||

    Don't forget that the Icelanders told the British and Dutch banks to fuck off over their demands they cover their payouts to investors in the IceSave collapse.

  • Tim Cavanaugh||

    And astoundingly, Icelandic bond rates are still much lower than Greek bond rates right now.

  • ||

    If I recall correctly, Icelandic voters (on more than one occasion) forbade their government to "compensate" foreign borrowers.

  • Zeb||

    There seem to be a lot of pictures of Krugman drinking. Maybe he's just a delusional drunkard.

  • Cytotoxic||

    Ireland's recovery wouldn't have been so delayed and painful had it not been for the Euro.

  • Neu Mejican||

    I am fuzzy on the details, but the IMF was involved heavily in Iceland as I recall. Included loans and stimulus, no?

    Serious question.

  • cynical||

    Wikipedia suggests that the international community loaned Iceland ~$10 billion in total. The IMF contributed $2.1b of that directly and arranged for $2.5b from other countries.

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