Niall Ferguson vs Paul Krugman debate

Discussion in 'Economics' started by buzzy2, Jun 10, 2009.


    Notice that Krugman answers Ferguson with arrogant and insulting disdain for the questioner, not with logical reasons.

    The bond market just threw a huge egg on Krugman's face, but the self-important idiot still thinks he's right.

    Ferguson has a huge advantage over Krugman: he knows History very well.

    Krugman is just a Keynes worshipper. But unlike his demi-god, the facts will not make him change his mind.
  2. Daal


    So if bonds were to put a big rally does that mean that Krugman is right and Ferguson wrong?I bet you would not allow yourself to have that conclusion, you will come up with an excuse on why he is wrong since you dispise his politics
  3. If you had read about the Ferguson-Krugman debate you would know that the point is that Krugman thinks that the US government faces an infinitely inelastic credit supply curve, which is a key point in his view of the world and which is patently absurd.

    I leave you to come up with your own reasons why Krugman says and believes such silly things.

    Ferguson is infinitely smarter and more knowledgeable than Krugman. I suggests to read his books and magazine articles. I do not agree 100% with him, but minor details, I share his big picture vision.

    Why? because it's just History, and History always repeats itself. It's never "different this time".
  4. Daal


    Man, the US government is raising money at 2-4% long-term rates, china only bought a fraction of the 2008 government issuance. The vast majority of US treasury issuance is being bought by US citizens and entities, that is only happening because savings rates are rising(which krugman calls a global savings glut) due risk aversion

    So far the krugman concern about the 'government solvency' being called into question is not even CLOSE to be playing out in the US. CDS spreads in the US are going down, the fact that rates rose it not a surprise, the stock market put a 40%+ rally, what you would expect would happen to treasuries

    Ferguson is trying to justify his opinion and is using a few months worth of a bond mini bear market as 'evidence', that means if treasuries rally he needs to be ready to concede that he was wrong. So I will looking forward for his reversal as I expect treasuries to put a nice rally from current levels
  5. Wrong again. It's not about ST bond yields. It's about the big picture 10-20 years ahead.

    But if you insist on discussing the ST, bond yields are just a clue Krugman is wrong. Such a steep yield curve is completely unexplained and unexpected by keynesian models.

    If bond yields come down again that's irrelevant, their model has already been proved worthless.

    You are being unfair to Ferguson focusing on ST because keynesians are wrong<100% ST, but have absolutely nothing credible to say about LT trends.
  6. Daal


    buzzy, Krugman and Ferguson are on the SAME PAGE. They both say "the government can raise money till they can't", its just that they spend to much time on their political bickering that people are left with the impression that they are disagreeing. Krugman says the same thing as Ferguson but he does(as usual) in a highly BIASED way that enables him to push his agenda(more government). He conceded that if people get worried about government solvency interest rates would rise, ferguson says the same thing. Where ferguson is wrong is to attribute this rise to concerns of government solvency, its much more likely it is related to the 'green shoot' virus that infected the markets and risk taking returning
  7. Daal


    Here is the thing, if the bond market sold off due the green shoot theory and risk taking returning to the extend that the stock market is correct on the likely path of the economy(which they could be), this additional rise in interest rates is irrelevant because all is well and there will be no 'war' between monetary policy(which lowers rates) and fiscal policy(which according to ferguson is raising rates). In fact if the stock market and the bond market are right the fed would have to RAISE rates at some point because recovery is coming, there would be no war
  8. Cutten


    I'm amused at the notion that an academic economist and a historian know what is going to happen to the global economy. If they had any idea, they would be succesfully speculating, not commentating on it. Ferguson or Krugman could just say "I'm long/short 50 CBOT 10 year futures - how about you?"

    Those who can do, do; those that can't, talk about it.
  9. I agree that Krugman is completely useless for trading and less than useful, even harmful, for economic policy making.

    I follow closely Niall Ferguson's media appearances. I get for free what hedge fund GLG Partners is paying good money. He is called the "hedge fund historian" see article below from September 2007.

    I think that at the end of the day Technical Analysis is just a form of quantitative history. Niall Ferguson provides a narrative that might help me with my long term quantitative studies.

    Of course it will be irrelevant if you're just limited to 1 minute charts or daily charts with 4/5 years history.

    Faces In The News
    Meet The Hedge Fund Historian Niall Ferguson

    LONDON - "The devastating nuclear exchange of August 2007 represented not only the failure of diplomacy, it marked the end of the oil age. Some even said it marked the twilight of the West."

    It may read like bad science-fiction, but the above scenario came from the pen of from Harvard professor and historian Niall Ferguson, whose prediction of a chaotic, war-torn future, published in the London Telegraph in 2006, has struck a chord with, of all places, British hedge fund GLG Partners.

    As a result the firm appointed the controversial Ferguson as a consultant, in the hopes that he will help them better navigate today's turbulent financial markets. No doubt GLG believes his deep expertise regarding past eras of strife--like 19th-century imperialism and both world wars--will help guide them through today's roiling, if not yet apocalyptic, markets.

    GLG Partners, which manages some $21 billion in assets, hired the 43-year-old Scottish historian as a consultant in July, when trouble in the credit markets first began to affect notable private equity deals, such as Kohlberg Kravis Roberts (nyse: KKR - news - people )' buyout of British retailer Alliance Boots and Cerberus Capital's purchase of Chrysler from DaimlerChrysler (nyse: DAI - news - people ).

    Since then, the lack of appetite for riskier debt related to the American mortgage market, and fears of a recession in the U.S., have spread through the global economy, from stock markets to inter-bank lending.

    Ferguson is no stranger to the bond market and its role in international finance. One of the main points in his 2001 book, The Cash Nexus: Money and Power in the Modern World, was the importance of marketable national debt. Such debt, he argued, created an effective "square of power" linking parliament, a tax-collecting bureaucracy, a central bank and the national debt itself.

    But he is more famous for his outspoken and revisionist views of 19th-century imperialism, particularly Britain's. In fact, during one 2003 lecture he argued: "The British empire from the 1850s onwards was an incredibly liberal one. For all the warts on its face it created a free enterprise global economy, protected women and stopped infanticide in India, and ultimately brought representative democracy."

    This may seem to have little to do with hedge funds, where quantitative analysis usually proves more reliable than historical conjecture for trading huge amounts of money. But, according to one senior industry insider, that could very well be GLC's incentive for hiring Ferguson.

    "He has a completely different perspective," the insider said, adding that a hedge fund might benefit from a historical perspective during times of great market uncertainty. "The basic rationale is that times change, but people don't."

    And even the best quantitative analysis cannot outwit price volatility when investors rush for the exit doors, as witnessed in August when Goldman Sachs (nyse: GS - news - people ) saw $1 billion wiped off the value of one of its funds.

    Ferguson's fellow consultant to GLG is Campbell Harvey, professor at Duke University's Fuqua School of Business and author of papers including "Political Risk, Financial Risk and Economic Risk" and "Emerging Equity Market Volatility." Between the historian and the economist, GLG just might have the right intellectual capital on which to bank its financial capital as it attempts to navigate the crises to come.