Harvard University fund sells all Israel holdings

Was just about to post something along those lines, Azrael and saw your post as I started. Equity investors (or suckers as I like to call them ) see no growth in the world in the foreseeable future. The analyst herd mentality right now is to recommend people plow a lot of their non-U.S./Europe/developed Asia money into a handful of emerging markets (riskier, but much greater growth potential). Israel doesn't really fit that profile, and to the extent they might have been part of someone's emerging markets portfolio over the last decade or two, I could see getting out and moving that kind of money elsewhere. You'd expect Israel's markets to perform more like the U.S.'s or Germany's over the next few years than Brazil's. That is why there was no Apartheid-like political statement made. It was just money managers being cutesy money managers.

 

Paul Krugman may or may not have been talking about a housing bubble as far back as 2002 (but definitely was throughout 2005). He was also continually calling for low interest rates that led to a bubble in the first place. Which is typical Paul Krugman. He throws out so much crap, than if you ignore how often he's wrong or suggests we enact the absolutely most catastrophic "I am smarter than you are, so let me manage the economy for you" ideas, you can find a germ of brilliance in any particularl throwaway he happened to write. He writes a lot.

Unfortunately for him, his stuff is all archived and sitting there like a bunch of poorly-constructed bricks supporting a large building.

Amazingly, it doesn't stop Krugman from trying to scrub (or re-explain) his record for everyone, and then he kind of omits how wrong he was about his "I can manage the world better than it can manage itself" prescriptions which always end up having caused bigger problems if you look back 5 or 10 years later. Some of his policy prescriptions actually caused the housing meltdown (despite his politicizing everything to try to obscure the truth and turn it into Republican-Democrat pissing matches). At the same time, Paul Krugman was dropping a reference or two to rising housing prices in a blog or a column as it became apparent, he wrote column after column calling for the types of stupid policy (including monetary policy that made money way too cheap and plentiful, which caused people to get in over their heads) that eventually led to a catastrophic housing market crash. One he didn't foresee, which happened for reasons he never anticipated.

Which is more significant? A prognostication that really wasn't a prediction of anything, just an observation? Or his continual policy calls that helped contribute to a much bigger catastrophe than he ever predicted or imagined?

In fact, Krugman also threw out something about a Fed-initiated housing bubble being a possible policy initiative, in order to try to manipulate the economy when we were slumping a bit in 2002 (after 9/11), because he was so afraid of a recession then. The basic idea was that we had just had a stock market bubble, so maybe if we replaced it with a housing bubble, we could avoid the recession he was predicting (which didn't happen then, even though he was itching to see a downtick in economic growth turn into a recession, so he could politicize it). It wasn't a hallmark of anything Paul Krugman was calling for, but he threw it in a column, and believe me, if he could have looked back 5 years later and used it as proof that he was a genius who had prescribed the right policy idea to manage the world for us, he would have. As it turned out, it's essentially what Alan Greenspan unwittingly did and it made the crash much greater than it would have been.

Then whenever he wrote about the economy being driven by real estate throughout 2005 or so (and Paul Krugman was hardly the only person who saw the obvious), he wasn't summoning warning bells about collateralized debt obligations that weren't pricing in risk properly, or a prolonged period of artificially low interest rates creating false prosperity being the problem (i.e. policy manipulation of the sort Paul Krugman continually called for). His warning over and over again was that our housing market was being propped up by foreign investors. I won't claim I am a genius. I was reading what Krugman wrote and had some of the same worries. But let's at least be honest about what he wrote and when.

Foreign investment propping up our economy had as much to do with the eventual housing market crash as his politicized spending sprees ideas have effected economic growth the last year and a half. He was blowing into the wind with a continual siren call and he was wrong.

Paul Krugman throws out so much BS, that he's very often right about something relatively insignificant (and in this case he saw high housing prices in 2005 -- so did LOTS of commentators) while being wrong about the kinds of things he wants his political cronies to do.

As a macroeconomist who studies trade patterns, in particular, Paul Krugman is a really smart man who has done some impressive work that crystallized some ideas about trade behaviors that defied orthodoxy.

As a political hack, he kind of sucks.