Larry Summers is a brilliant economist. And he and Krugman have known each other forever--they served together on a Reagan advisory board as long ago as the early 1980s. It is sad to see Summers reduced to political shill saying things that no informed observer believes Larry Summers actually thinks and tossing out implications Summers knows are bogus. For instance, Summers was running around yesterday saying "I wish he (Krugman) had waited until we released the plan to comment." That
implies that Krugman's assumptions about the plan were factually flawed and would have been different had he waited to see the plan. But it doesn't
say that because there were no erroneous assumptions and Summers knows that. Krugman may well be wrong but he isn't a crack-pot who doesn't understand basic economics and is misinformed as to the nature of the plan, as Summers' comments quite intentionally imply.
“I was surprised by Paul (Krugman's) comments,” (Larry) Summers told Bloomberg News on Monday.
False. Nobody was surprised. The comments were a reiteration of long-publicized views.
“He didn’t seem to recognize that this is one component of the plan..."
False.
"...and I don’t know of any economist who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.”
Irrelevant and trite.
Futhermore, Summers accused Krugman of not actually recognizing what was announced today. “Paul has views on the state of the banking system. Certainly many observers don’t share those views,” Summers declared.
"Many" observers think the Earth is flat, but most do not.
“But more relevantly, that wasn’t what today’s announcement was about.”
False.
Summers added: “I didn’t understand his argument.”
Extra False.
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