Friday, January 23, 2009

Krugman blasts Obama's inaugural speech and sees little realization of the times in his words

Nobel Prize-winning economics writer Paul Krugman tore apart President Obama's inaugural speech today and wrote that it left him more anxious about the nation's economic future than before the Democrat spoke.

Krugman referred to the "muddle" cited by famed economist John Maynard Keynes before the Great Depression.

" ... Mr. Obama is, as his predecessor put it, the decider. And he’s going to have to make some big decisions very soon. In particular, he’s going to have to decide how bold to be in his moves to sustain the financial system, where the outlook has deteriorated so drastically that a surprising number of economists, not all of them especially liberal, now argue that resolving the crisis will require the temporary nationalization of some major banks.

So is Mr. Obama ready for that? Or were the platitudes in his Inaugural Address a sign that he’ll wait for the conventional wisdom to catch up with events? If so, his administration will find itself dangerously behind the curve.

And that’s not a place that we want the new team to be. The economic crisis grows worse, and harder to resolve, with each passing week. If we don’t get drastic action soon, we may find ourselves stuck in the muddle for a very long time.

I agree with Krugman. Obama's speech did not impress. It was all right for the moment. But it did not inspire hope in me as an investor, which is why my fortune remains on the sidelines and not in the markets It's also why the Dow fell 2.5 percent this week. Look for much more decline to come.

Krugman noted that Obama tried to paraphrase Keynes in his address.

But something was lost in translation. Mr. Obama and Keynes both assert that we’re failing to make use of our economic capacity. But Keynes’s insight — that we’re in a “muddle” that needs to be fixed — somehow was replaced with standard we’re-all-at-fault, let’s-get-tough-on-ourselves boilerplate.

The president has a lot to overcome to get an economic stimilus plan into law. The biggest obstacle may be that he does not seem to sense all that is needed to make the best decisions at such a critical time in this nation's history.

No comments: