Monday, October 13, 2008
In Paul Krugman's blog this morning you could read that something 'funny' had just happened to him. A 'natural' stand-up comedian (very much like Bill Maher), Paul Krugman, is an Economics Professor at Princeton, 55 years old (only thing I have in common with the bloke, sad to admit), and since this morning he became the laureate of the 2008 Nobel Prize for Economics! Ain't this something?
If you are patient enough to run the above clip to the end you'll learn more about the present financial crisis that you had ever wished. One thing for sure you keep on forgetting as you're watching the clip is when this was actually shot. Krugman gave that short lecture about the economy something like a year ago (ok, wee bit less than that... December 14th, 2007). As he goes on talking you need to keep correcting your thoughts and be thinking: 'No, its not yesterday he did that, it's a year ago'. Amazing. So, there's nothing new about this mess. It's been out in the open at least since August last year. The other thing you learn is that it's not the first time this happened in the last 20 years. In a similar case with a pretty serious impact on deposit owners, the Fed bailed them out by spending more than 150B dollars of taxpayer money. No need for a Congress approval on that bailout though as straight deposits were normally guaranteed by the Government. This time, the mess was caused by the 'get-rich-real-quick' pastimes of the fast and the furious Wall St. boys & gals, with products of Financial (Engineering) Innovation whereby mortgage loans that shouldn't be (subprime) were arranged in 'baskets' with a variety of other financial 'securities' with no transparency whatsoever changing hands multiple times and ending often in the pockets of many atypical 'financial' institutions, leading them into the abyss of bottomless exposure. The rest we know...
Congrats Mr. Krugman! Is it a coincidence that the man is a lifelong liberal too?