Paul Krugman, Nobel Prize Winner

Congratulations to Paul Krugman for winning the 2008 Nobel Prize for Economics.  Krugman was awarded the prize for his work on international trade. 

Krugman also deserves high praise for warning about the housing bubble for several years — at least as early as 2005, while delusional supply-siders insisted everything was fine.  To highlight this point, you are some excerpts from a debate between 2005 Krugman and Larry Kudlow on MSNBC’s hardball.

KRUGMAN: You just look at the — first of all, you look at the numbers. The number are — not the national averages, because there is a large part of the middle of the country where nothing is happening. But if you look at the coasts, the house price increases are way out of line with everything that might justify it. They are way out of line with the increase in rents…they are way out of line with the economy — economic growth. So, it looks — the numbers look like they did before the Nasdaq bubble burst.

KUDLOW: Just real quick, I think it is an investment-led recovery, particularly capital investment. I agree that housing is very strong. I`m totally in favor of that; 97 out of 100 people who make these borrowings know exactly what they are doing. You know, it is as though journalists and other professors think that the rest of the people don`t get it. They do get it. They know precisely what they are doing. They know how to roll over loans. They know how to fund them 30 years. You can make it more affordable by allowing yourself the new mortgage options that thankfully are available. You`re not going to have a housing bubble go bust when the unemployment rate is low and the economy is growing at 3, 4 percent. The name of the game here keep taxes down and stop the fed from throwing a monkey wrench into this prosperity.

The fact that Krugman is so often right is obviously frustrating for conservatives.

Just for the record, I will note that supply sider Larry Kudlow continues to host his own television show on CNBC, despite being so very wrong about the housing bubble AND the technology stock bubble.