Megan Explains Herself: The Explaining.

Pull up a chair, grab a cup of coffee, and smoke 'em if you got 'em. It's time to visit Megan's Playhouse. This post deserves a good, hard frisking, but like everyone else this is a part-time gig for me, and the highlights will have to suffice.

First Megan pins her ire on poor Brian Beutler. Evidently he has gone from being her blogger friend whose injury shocked her to simply another liberal blogger. And what have those naughty liberal blogs been up to?

Several liberal blogs are chortling over this statement I made early in the
year: [etc. etc.]

They "chortled"? There was "chortling"? The merry sounds of chortle were heard through the land? That literary noise must have really discomforted Megan, so, being a empathetic liberal, I did a little search* for anyone who could be laughing at her. I found four sites that laugh or have laughed at Megan, but at the time of her post only two blogs mentioned the "explaining" post; mine and Beutler's. Since I doubt Megan reads this blog, her "several" liberal blogs is really the aforementioned one blog. One blog, that sent her on an orgy of explaining and excusing. Just one. (Has Megan considered teaching? You need a thick skin there too, but at least there isn't a permanet record of one's overreactions.)

And then the insults begin, from the self-professed model of civility named Megan.

This is what comes from not reading economics commentators besides Paul Krugman.

The belief that Paul Krugman is some sort of singularly talented
prognosticator on matters of policy and the economy is almost entirely found
among people who do not spend a lot of time reading the financial press, and
also, have forgotten the many concerns he expressed that did not come to pass.

I do not think it is possible to regularly read those [financial]
publications and reasonably sustain the belief that Paul Krugman has been
uniquely, or even especially, prescient about current conditions. That's no slam
on Krugman. It's a slam on people who are unaware that there are really quite a
lot of smart people out there writing about the economic issues of the day.

So much for the gullible fools who think Krugman is All That. Now, Krugman himself. Do you think he's Nobel material? You fool, you! Megan has plenty to say to help you understand that Krugman isn't so special after all, no matter what everyone says.

Almost every commenter who is not named David Lereah both recognized that we
were in a housing bubble, and expected that when the housing bubble popped, the
economic results would be ugly.

So the idea that Krugman has somehow won
one for the team by predicting something that
libertarian/conservative/free-market commentators didn't see coming is either
misinformed, or lunatic. We all saw the problems with the housing bubble; most
of us thought a recession was getting pretty likely, given America's terrific
overextension of its consumption, the falling housing market, rising commodity
prices, and the simple fact that the longer you've gone without a recession, the
more likely you are to get into one soon.

The belief that Paul Krugman
is some sort of singularly talented prognosticator on matters of policy and the
economy is almost entirely found among people who do not spend a lot of time
reading the financial press, and also, have forgotten the many concerns he
expressed that did not come to pass.

Krugman is a great popularizer of
economics, but his writing is not filled with unique insights that cannot be
gleaned elsewhere.

See, he just thought and said what everyone else thought and said. Nothing special about that.

In fact, Megan herself was frequently just as smart as Krugman! Here is where I realized that I've constantly underestimated Megan McArdle. I thought that becasue she isn't very smart that she can't do smart things. Nothing is further from the truth. You don't need brains to be cunning, you just need a lot of self-interest and a little ruthlessness. I thought Megan couldn't manage to ride the coattails of a man she's often denegrated, but watch carefully what she does here:

What I--and, as far as I know, Paul Krugman--did not expect was the magnitude or
the direction of the problems it would cause. We expected first, consumption
contraction from a reversal of something known as the "wealth effect"--when
assets appreciate, people feel richer, so they spend more; they also sometimes
borrow against the current or future value of those assets.

Did you catch that? It was quite subtle.

What I--and, as far as I know, Paul Krugman--did not expect was the magnitude or
the direction of the problems it would cause. We

There! Megan said she didn't know what Krugman expected, but as far as she knew he agreed with her. Then she jumps straight to "We." Beautiful! I'll give that a 9.4, losing only a fraction of a point for her tactic's inevitible failure.

But wait, there's more!

We also expected that it would hurt bank balance sheets, which would mean
retrenchment and therefore a slowdown in lending to other areas. I, and possibly
Krugman--I don't really have time to comb through every column he's ever written
right now--further expected that it would have deleterious effects on the
government fiscal picture, especially in bubbly areas. And, of course, we
expected that the eventual decline in the construction boom would show up in
GDP, since construction is a major component.

Mind you, she doesn't have time to comb through every column of his. It's not like it's her job, or something.

Megan than throws in a few mistakes for the sake of not looking like an idiot, since her old posts keep popping up, accompanied by more liberal chortling.

What I--and, as far as I know, Paul Krugman--did not expect was the magnitude or
the direction of the problems it would cause.

But I did not foresee how
tightly coupled our financial system would prove to be. I didn't see how far the
problems would spread--I didn't even expect the magnitude of the crackdown in
commercial real estate lending, much less the generalized credit freeze.
Neither, AFAIK, did Paul Krugman. And one of the areas that we were both very
concerned about, the decline of the wealth effect, has proven to be relatively
much less important than expected.

You see, neither of them were 100% right, so they're even, they're equals. Almost.

Krugman also thought we might be about to get into a recession several earlier
times, when I was more skeptical; in that sense, I called it better than he did.
My care about calling a recession earlier in the year was not because I thought
the economy was in fine fettle. Rather, it was because Britain had, against all
theory, dodged a recession despite a popping housing bubble even more impressive
than ours. This even though they'd gone more than a decade without one. Having
watched the British economy in my professional capacity for most of the current
decade, I'd seen it declared on the verge of recession multiple times by various
commenters, for what seemed like good and sound reasons; nonetheless, it never
quite went there. This made me somewhat cautious about proclaiming that a recession was inevitable based on our fundamentals.

Megan is even more right than the sometimes wrong Nobel prize winner.

You know what's next.

I know I saw that recession around here somewhere . . .
31 Jul 2008 11:56 am
The economy grew at 1.9% last quarter. Two thoughts.
First, the American economy is simply amazingly resilient--1.9% is cause for
exultant celebration in a lot of European finance ministries. And second, Barack
Obama's campaign team is probably doing some serious rethinking this morning.

And--

I took some flak on liberal blogs for pointing out that Paul Krugman has
been the voice of doom on the economy for nigh on a decade. But there was good
reason to think that there might be a recession, my critics cried.
Here's the problem. What's the one time that Paul Krugman didn't forecast a recession? That would be when we actually had a recession. It just wasn't a recession that could be blamed
on George Bush.

And--

Paul Krugman is voting for doom. It's worth keeping in mind, however, that Paul Krugman has
predicted eight of the last none recessions under the Bush administration.
I think it's obvious we're in a slowdown, and a recession seems likely-ish, but
Britain's skirted recession for over a decade now, so I can't be too
fatalistic.

Clearly McArdle thought Krugman was both wrong and too ideological to see the "truth" anyway. Finally, Megan ends with a quotable sop to Krugman's reputation and skill. It's quite the performance. Megan would be perfect for Fox TV, to provide explanations to their viewers on how the Democrats brought about the recession by being right for the wrong reason.



*I checked technorati and google, about five pages in each. Heh, and I found this.