Paul Krugman on the European Crisis

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Paul Krugman - Caricature

Paul Krugman – Caricature (Photo credit: DonkeyHotey)

Paul Krugman wrote an article that really made me think. Brain, don’t worry, we’ll get our revenge somehow.

It always felt a bit simplistic to impose austerity on countries being smacked by the debt-hand. Luckily we have a real economist who is well-versed in statistical analysis, and can write surprisingly intelligibly. Krugman posits that it is really more about the current account deficit – i.e. the fact that the countries experiencing problems are importing significantly more than they are exporting.

One problem; you can make statistics say whatever you want them to say. While we are not supposed to run regression after regression to eventually find a pattern, once that pattern is found, it is hard to resist. Economists and others can then search for stuff that supports the view that feels right.

So what’s the solution? Live in a country that is really good at making stuff that lots of people want. What does Facebook make again? Oh yeah…friends. I’ll take three.

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