Friday, 23 January 2009

Krugman Tells Valor Governments Should Spend More. His Words Can Be Misinterpreted by People Like Mantega

Yes. For people like Brazilian Finance Minister Guido Mantega articles like this in Valor Econômico may sound like music to the ears. Mantega (photo, in his version of Criswell, the bizarre predictor of events decades ago) can't probably sleep at nights, thrilled by the fact that the global crisis is helping all his predictions (and wishes) about stronger government finally come true. Nothing more fallacious than that. You see him more confident and daring and encouraged to make stupid decisions these days.

Paul Krugman, the Nobel Prize winner, is telling governments of the world, ''spend now and worry about the costs later,´´ people like Mantega risk following his instructions to the word, impoverishing our children in the meantime. Krugman should watch his tongue better. The same guys who followed Milton Friedman's creed are now seen as stupid. Krugman is worried that the Obama economic salvage package will be unable to revive the economy (Valor says the measures are preventing dismissals and asset writedowns from getting worse, not improving the situation.) Mantega yesterday pledged to increase national debt by 10 percent to beef up the state development bank with new funds and lend to the nation's companies. Produce and invest for who? Wouldn't it be logical to allow companies find their optimum level of production until it hits rock bottom? Social costs are huge but, wouldn't it be logical?

No comments:

Post a Comment