LongTomH's Journal - Paul Krugman: Hedge Fund Hippies

Prof. Paul Krugman's last post on his NY Tim blog starts with the statement: "Don't expect the economy to perk up any time soon." He then quotes from an article on The Wall Street Journal:

Speaking exclusively with The Wall Street Journal, Barton Biggs, managing partner at multibillion dollar hedge fund Traxis Partners, painted a bleak outlook for the developed world with only huge government intervention likely to improve things.

<snip>

Mr. Biggs, former chief global strategist for U.S. investment banking powerhouse Morgan Stanley, demanded the U.S. government temporarily return to ideas used in the Great Depression as a way to get the country back to higher growth.

“What the U.S. really needs is a massive infrastructure program … similar to the WPA back in the 1930s,” he says.

The plan would be to employ some of the many unemployed people, jump start the economy, as well as help catch up with Asia, which is building state-of-the-art infrastructure from new mechanized port facilities to high-speed trains.

Prof. Krugman ends by ruefully remarking: "But as we know, only bearded (hippies) professors who don’t know anything about the real world of big money say things like this."

'Rueful' because it's now common 'wisdom' that New Deal ideas are outmoded and 'New Age' economics (i.e. laissez faire ideas from the 19th Century) all the rage now! As an aside, I heard someone at a Foresight Institute conference in the early 2000's, suggest using a WPA-type program as a cushion for the economic shocks coming from the introduction of nanotechnology.