Krugman!

Hard to create a more economic title than that! This is a post about my last three days, each of which ended with and hour and half of Prof. Paul Krugman courtesy of the Robbins Lecture.

Monday I met with a friend who has also finished exams and went to the National Portrait Gallery (it's at the back of the National Gallery on Trafalgar Square). I had been before and seen the historic shots, but we spent our time in the modern section. The best portraits, in my opinion, were of Dame Judy Dench and the Harry Potter trio. Who are now fairly old (well, my age, which is old for supposedly sixteen year olds).

That night was Krugman's first section, The Sum of All Fears. I won't go into too much economic detail, but basically it made the case for why traditional monetary policy (in Greenspanesque monetary base expansion) won't work for this crisis (in short, the interest rate is already at zero, so no cut is possible, hence a liquidity trap). Not necessarily the happiest of lectures, but some oh-so-brilliant economics. (On a funny note, he spent part of the lecture making fun of modern economists, including himself, for being so wrong about such things. In fact, the book of his I bought, and then got him to sign, he himself has since made obsolete.)

Tuesday was more museum day. Same friend and I went to the much-publicised London Transport Museum off of Covent Garden--and actually had a really good time. I must admit prior scepticism (I hate that work with British spelling...but my laptop's still set), especially as this is one London museum with a entry charge. But I must admit, totally worth it. We got to drive a tube simulator! Then we ran up to the British museum to catch the India wing before heading back to campus to catch Krugman, part II: The Eschatology of the Crisis. Which is a fancy way of say the end of the crisis. In yet more joy, the traditional equilibria mechanisms aren't so much working, so while the recession may be officially declare over this summer (in the States, NBER can sort of subjectively decide which indicators to choose...) Also, the housing bubbly was sort of obvious and we all should have seen it. But of course we didn't. So better information for the next bubble, at least.

Today, Wednesday, we started off at a play. 'The Eternal Not' is a one act play based on Shakespeare's All's Well That End's Well. It was small production (in the round) at the National Theatre, which we quite enjoyed. The play was entertaining, yes, but so was getting to explore that National. Then we did a library tour of London. Or at least, the UL system. We headed first to King's College. They're are rival, but have a BEAUTIFUL library. If you ever get the chance, check out the Humanities Reference room (all three floors, Beauty and the Beast style) and study in the clock tower floor five carrels. Then to Senate House Library, which is the biggest maze I've seen holding books. But I managed to find the Elizabethan England section and read a bit about the Privy Council, for personal family reasons.

Tonight was Krugman's last, and best, speech. The Night They Re-Read Minsky. He basically gave a history lecture of all macroeconomic theories, from Keynes onward. And then pointed out where the schools had split, and where we should head from here. The sort of sad bit here is the macro wars are not over. For much of the 70s and 80s, two rival macro school existed and essentially waged all out war (New-Keynsians at MIT, Yale, Princton, Berkely, etc vs. Real Business Cycle at Chicago, Pitt, CMU, etc.) During the recent decade, these wars were usually though to be put to rest (I was taught, Econ101 that they were), but since the crisis, not so much. We're back in infighting withing the field, which while intellectually stimulating, makes presenting policy difficult. Though no one get off too easily. As Krugman put it multiple times, econ grad school can be split two ways: those who spent almost none of their time on issues relevant to this crisis, and those who spent none of their time on it. Anyway, we need to get back to fiscal policy as at least a discussed option...especially as we're now spending billions.

Best to all, and please please please if you have any free time, download the podcasts of the last three night's Robbins Lecture by Krugman. He's one of the world's best right now, and while you might not agree with everything he says, it's hard to argue against most of it.

Click here, scroll down, and listen:

Bye!