Monday, October 19, 2009

Paul Krugman Can't Make Up His Mind On Bank Lending

In today's column, Paul Krugman makes two contradictory assertions.

On the one hand he claims that banks are "too reluctant to lend". Before we go to his other assertion, we must ask ourselves, just to whom are banks reluctant to lend? Most likely to loan applicants deemed risky.

But on the other hand Krugman also says that "financial reform" (whatever that is supposed to mean) is desperately needed, or otherwise banks will start taking risks.

First he argues that banks are too reluctant to make risky loans and then he argues that we need to act to stop them from making risky loans.....


Blogger Wille said...

It's pretty much the same argument as most of the mainstream Keynesians are going along with.
In Britain the government wants to "force" banks to lend with one hand, while the other hand wants "tougher regulation to stem risky lending".

10:41 AM  
Blogger traumerei said...

Krugman's a hack, but then again, all interventionists are.

6:46 PM  

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