PAUL KRUGMAN: Joe Nocera Gets Mad

December 24, 2011, 8:37 AM

And it’s a beautiful thing to see.

Today Joe once again goes after the Big Lie — the claim that Fannie and Freddie caused the crisis — and drives home the point that the people advancing this story aren’t just wrong but are acting with intent, engaged in deliberate deception:

In Wallison’s article, he claimed that the charges brought by the Securities and Exchange Commission against six former Fannie and Freddie executives last week prove him right. This is another favorite tactic: He takes a victory lap whenever events cast Fannie and Freddie in a bad light. Rarely, however, has his intellectual dishonesty been on such vivid display. In fact, what the S.E.C.’s allegations show is that the Big Lie is, well, a lie.

Read the whole thing.

PAUL KRUGMAN: Fiscal Policy Works

December 24, 2011, 9:15 AM

Via Brad DeLong, there’s a paper by David Romer (pdf) summarizing recent research on fiscal policy, inspired by the crisis and aftermath. And his conclusion is not at all what you hear on the talk shows; it is that there is now overwhelming evidence that fiscal policy does in fact work when it’s not offset by monetary policy. And since we’re now in a liquidity trap in which conventional monetary policy has no traction, that’s the world we’re in.

PAUL KRUGMAN: Exchange Rates and Wages

December 24, 2011, 8:56 AM

A followup to my post about modern Chicago economists forgetting what Milton Friedman knew: recent events have actually given us a dramatic demonstration of the reality of nominal wage stickiness. Here’s a graph I’ve shown before:

China should prepare for trade deficit next year: former commerce official

English.news.cn   2011-12-24 23:05:16

BEIJING, Dec. 24 (Xinhua) -- China should get prepared for trade deficit in the coming 2012 due to the grim global outlook, while seizing the chance to make structural adjustment in foreign trade, the country's former vice minister of commerce Wei Jianguo said here Saturday.

Wei Jianguo, now secretary-general of the China Center for International Economic Exchanges, said at an economic forum that with export gradually falling, growth in China's foreign trade is likely to drop to single-digit next year.

Economic restructuring a "matter of life and death" for China: economist

English.news.cn   2011-12-24 23:39:47

BEIJING, Dec. 24 (Xinhua) -- Renowned China economist Li Yining said Saturday that adjusting the structure of China's economy is a "matter of life and death" while the structure of GDP is more important than its size.