Paul Krugman

Paul Krugman @paulkrugman

Is Mnuchin engaged in malicious sabotage? His rationales are extremely weak — and what about the Trump team would lead you to give anyone on it the benefit of the doubt? 12/ — PolitiTweet.org

Paul Krugman @paulkrugman

Which brings us back to Mnuchin, who is snatching away some of the tools the Fed has to manage a crisis — just as the pandemic is exploding again. Those tools weren't used much — but they provided an important backstop 11/ — PolitiTweet.org

Paul Krugman @paulkrugman

We had a somewhat similar experience in March/April, when the coming of the pandemic created a panic in financial markets — which was controlled more by the Fed's willingness to lend than by its actual lending 10/ https://t.co/UVkuFLvNfC — PolitiTweet.org

Paul Krugman @paulkrugman

The funny thing was that OMT — "outright monetary transactions", direct ECB lending to governments — never actually happened. The mere prospect that it *could* happen ended the crisis 9/ — PolitiTweet.org

Paul Krugman @paulkrugman

Sure enough, the euro crisis rapidly ended, with Spanish (and Italian and Portuguese) interest rates rapidly declining 8/ https://t.co/KJtEJtVMBf — PolitiTweet.org

Paul Krugman @paulkrugman

This suggested that the European Central Bank could stop the panic simply by promising to provide cash if needed. And in July 2012 Mario Draghi said three words: "Whatever it takes" 7/ — PolitiTweet.org

Paul Krugman @paulkrugman

But Britain didn't have that problem because unlike Spain, which was on the euro, it had debts in its own currency — and the Bank of England could always print money to pay the bills if necessary 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

He argued that it was a self-fulfilling liquidity crisis. Investors were afraid that Spain would run out of cash, and were fleeing out of that concern — creating the very cash crunch they feared. 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

As he noted, Spain's fiscal position wasn't significantly worse than Britain's — yet Britain had very low borrowing costs while Spain was in crisis 4/ https://t.co/oC57awoU18 — PolitiTweet.org

Paul Krugman @paulkrugman

At the time, borrowing costs for southern European nations were soaring, and default seemed imminent. But the Belgian economist Paul De Grauwe argued that solvency wasn't really the issue 3/ https://t.co/fkR6Ma9u6M — PolitiTweet.org

Paul Krugman @paulkrugman

When I think about these programs, my main analogy is the eurozone crisis of 2011-13 — a crisis that was resolved by a promise to lend if necessary, even though no actual lending took place 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

A wonkish thread on how destructive Mnuchin's decision to terminate emergency lending programs could be, even though those programs have been lightly used so far. 1/ https://t.co/7ZTIZpSHLh — PolitiTweet.org

Paul Krugman @paulkrugman

RT @nytopinion: . @PaulKrugman responded to readers commenting on his column "Making the Most of the Coming Biden Boom." Join the conversat… — PolitiTweet.org

Paul Krugman @paulkrugman

So it makes no sense to yank away the financial safety net — unless you're trying to set up the next president for disaster 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

Fed intervention, and even more important, the promise of more intervention if needed, calmed the markets. But it could happen again — after all, we seem headed for a virus outbreak worse than in the spring 3/ https://t.co/0HeheqrtOC — PolitiTweet.org

Paul Krugman @paulkrugman

One of the great fears when the scope of the pandemic became apparent was that it would metastasize into a financial crisis too — and in fact it started to, with 2008-type surges in yield spreads 2/ https://t.co/1tddGGCCeR — PolitiTweet.org

Paul Krugman @paulkrugman

A bit more on Mnuchin's sabotage effort; it's helpful to know the context in which that money was made available in the first place 1/ https://t.co/XcfeV8w9Bn — PolitiTweet.org

Paul Krugman @paulkrugman

So basically we're looking at more sabotage by an administration on its way out. Never, ever suggest that Mnuchin was some kind of responsible player 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

Even though the ECB never did end up buying government bonds 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

Emergency lending programs can have a stabilizing effect even when they don't end up being used. Classic example: the euro crisis subsided when Mario Draghi promised to do "whatever it takes" 2/ https://t.co/fBPrngTtIe — PolitiTweet.org

Paul Krugman @paulkrugman

Mnuchin is effectively trying to create a financial crisis, or at least make one more likely 1/ https://t.co/XcfeV8w9Bn — PolitiTweet.org

Paul Krugman @paulkrugman

Dean Baker with some thoughtful disagreement. Basically he doesn't think durable goods, which fueled "morning in America", are set to surge. — PolitiTweet.org

Paul Krugman @paulkrugman

But it's actually what I've been saying for the past six months: V-shaped recovery once the pandemic is controlled 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

I express some economic optimism. Maybe it was something I ate 1/ https://t.co/GnyHA0FohM — PolitiTweet.org

Paul Krugman @paulkrugman

RT @BrendanNyhan: Only 12% of Trump voters think Biden was legitimately elected! 12%! https://t.co/oqk8Gp7qOq Dangerous even though Rudy/Tr… — PolitiTweet.org

Paul Krugman @paulkrugman

So Biden will inherit a horrible situation once they carry Trump out of the White House. But he has a good chance of presiding over an impressive 2021-2 boom 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

And they've accumulated a LOT of liquid assets 7/ https://t.co/wXRSdYnERL — PolitiTweet.org

Paul Krugman @paulkrugman

Partly that's because people did a lot of saving in quarantine 6/ https://t.co/xz6MNW21TQ — PolitiTweet.org

Paul Krugman @paulkrugman

This time balance sheets were back by the middle of the year, and have surely improved since then 5/ https://t.co/C450Df2oJz — PolitiTweet.org

Paul Krugman @paulkrugman

I've been arguing for a while that the Covid slump is more like 79-82 than 2007-9, when recovery was held back by severely impaired household balance sheets 4/ https://t.co/0K7wfJEj6v — PolitiTweet.org