I don’t often read Paul Krugman but because the NYT was hyping his new column as the most emailed I had to see what was going on. He begins by trashing the S&P for its downgrading of U.S. debt, comparing the rating agency with “young man who kills his parents, then pleads for mercy because he’s an orphan.” Krugman seems to regard the down-rating as the sin that cries out to heaven for vengeance. And why? Because S&P had given Lehman Bros. an A rating before it went bankrupt and therefore the company has no credibility.
Huh? Doesn’t his point suggest the opposite of what he intends? By his own account, S&P has a bias to overrate bonds. S&P down rated U.S. debt from AAA to AA+. Seems like S&P could continue to downlist U.S. debt a long way before even approaching Lehman territory. Plus, if A is supposed to be a vote of confidence in Lehman, how can AA+ constitute a pessimism so horrible that it is a crime against humanity?
He then goes on to suggest that there really aren’t any problems with America’s fiscal health that tax increases can’t solve. And this is justified because we have “very low taxes by international standards.”
I’m sorry, but this is just chilling. A debt rating agency dares to let out some slight be of truth, and Krugman trashes it, foaming at the mouth and nearly advocating jail terms for hate speech. Then he goes on to advocate the wholesale looting of the country to pay the government’s debt that is anywhere between $14 trillion and $215 trillion including unfunded liabilities.
Now I see why people like William Anderson and Robert Murphy are often driven to fits by this guy who is probably the most influential economist in the world.
Someone made this: