Myths de Jour, Krugman and Me

 Krugman has a piece which resonates.  My comments precede his oped below.

The mythology of the "invisible hand" of "free market competition" working in "an efficient market" was pushed when it was profitable for American corporations and banks.

Fifteen Non GDP Measures of US Economic Health

Most of my posts discuss US economic health.  I almost always use GDP growth as a measure, and will continue to do so.

Though GDP as a yardstick of economic health is deeply flawed, it is the only  measure universally recognized by politicians and economists, and is a not unreasonable measure of economic growth, albeit not economic health.  

Bloomberg--U.S. Home Prices Face 3-Year Drop as Inventory Surge Looms

  A variety of sources are quoted on US house price declines

Bloomberg

By John Gittelsohn and Kathleen M. Howley - Sep 15, 2010

The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.
Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.
“Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco. “Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year.”

Iraq War Costs Exceed $3 Trillion

Stiglitz in the Washington Post

Writing in these pages in early 2008, we put the total cost to the United States of the Iraq war at $3 trillion. This price tag dwarfed previous estimates, including the Bush administration's 2003 projections of a $50 billion to $60 billion war.

Krugman -- "...It's all downhill from here"

NYT Sept 6th 
Krugman -- Delusions of Recovery

"  I’ve had a couple of conversations lately with people who follow politics and public affairs, but aren’t that close to the economic discussion — and I’ve discovered that there are two comforting delusions still out there.

Delusion #1 is that we’re on the road to recovery, just more slowly than we’d like; to be fair, the White House keeps saying this.
But it’s not at all true. GDP is growing below potential; employment, even if you focus just on private employment, is growing more slowly than the working-age population. If you ask how long it will take us to return to, say, 5 percent unemployment on the current track, the answer is forever.

Delusion #2 is the belief that the stimulus may yet do the trick, because there are still substantial funds unspent. I tried to deal with this last year. The level of GDP depends not on total funds spent, but on the rate at which funds are being spent, which has already peaked; GDP growth on the rate of change in the rate at which funds are being spent, which peaked last year. It’s all downhill from here. "

Emphasis mine

HRes 1553 -- War With Iran

See the end of my unemployment post.  I wrote that piece before I came across the article below from the mag Foreign Policy

Foreign Policy 
July 29 2010

"A game plan to draw the United States into a third war in the Middle East may be quietly unfolding before our eyes.

The Economist on Democratic Woes and Unemployment

From the Economist ... emphasis mine

The Democrats may not merely lose the House in November, but the Senate too. How did it go so wrong?

Jul 22nd 2010

....

Its Democratic masters say that the 111th Congress has been bold, busy
and effective. Since starting work in the middle of an economic crisis
it has authorised $1 trillion or so of stimulus spending, steered GM and
Chrysler out of bankruptcy, pushed through health-care reform and
overhauled financial regulation
....

Unemployment -- A First Look.

From Calculated Risk, -- job losses in the current recession compared with other post WWII recessions.