Krugman's housing bubble

From The Corner of Obliviousness and Laziness:

'Things I'm Glad I Never Said' [Mark Hemingway]

Arnold Kling digs up this Paul Krugman chestnut from 2002:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Oy. Might want to remeber that sentence next time you consider any of Krugman's economic advice.

(via Moynihan via McArdle)

Um, Krugman, in his actual 2002 column (which Hemingway does not bother to link to), does not say the U.S. needs a housing bubble. He says Alan Greenspan needs one in order to explain The Sage's optimism about the economy in the face of the NASDAQ bubble bursting and the likelihood of "double dip" inflation during the Bush II years.

Indeed, Krugman was quite prophetic as Greenspan did drive down interest rates and encouraged variable rate mortgages, thus pouring gasoline on a burning housing sector.

But the best part: Hemingway is too lazy to even come up with his own post title.

UPDATED to get rid of some annoying NRO html coding, fix spelling...the usual, ya know.

UPDATED II: Arnold Kling reconsiders.