From a small northwestern observatory…

Some Nobel Prize winners do great things, then it gets misused. Options theory comes to mind — Fisher Black (who died before the Nobel was awarded) and Myron Scholes gave us some wonderful tools for understanding how complex instruments should be priced, but I doubt they ever predicted the wild-and-crazy derivatives market that would result from their elegant math.

Others do great things, then misuse their fame themselves. Case in point — Paul Krugman. Now, I personally agree with most of the rest of the economic world that Krugman’s work in international trade was brilliant. On the other hand, I disagree with a lot of his politics. Don’t get me wrong — I read him all the time, and encourage others to do so as well. Note the link to his New York Times blog over on the right hand side of this page.

None-the-less, his April 17, 2009 column, titled Green Shoots and Glimmers, is Krugman wearing his “glass is half empty” hat, which he loves so very much. His column stands on its own, and I encourage you to read it. I don’t disagree with his facts. What I disagree with are his interpretations.

I would concur that unemployment probably hasn’t hit bottom. My own touchstone, based on the Philadelphia FED’s latest survey, is that we’ll see unemployment bottom out sometime in early 2010 and somewhere shy of 10%. I think we’ve seen the stock market bottom, and I think we’re close to seeing the bottom on housing prices.

Krugman would say this is all bad news — signs that the economy isn’t recovering and the Obama administration isn’t spending enough money. I would counter that the best ANY administration can do is to arrest the downward spiral (which the administration has apparently done), clean up the mess (which they are doing), and get out of the economy’s way so the free markets can go back to work (which is precisely the opposite of what Krugman would have them to do).

Do I agree with everything Obama is doing? No, but he’s doing SOMETHING, and it appears, at least in the long telescope, to be working. I don’t think we should all be cheerleaders, and a good, loyal opposition is a healthy thing for a democracy. However, the biggest danger for Obama’s administration doesn’t come from the right, but from the left, as evidenced by Krugman’s column.