Friday, January 30, 2009

Krugman in Portland

Nobel Laureate Paul Krugman came to Portland last night and I was among the lucky people to hear his account of where we are, how we got here, and how we might get out. Sigh.

This is a pretty good 3-minute encapsulation of what he said last night:

My conclusion, which is worth almost as much as you paid for it: we need to bulldoze several million houses, focusing the bulldozing on the areas of the country that have had the most severe declines in real estate prices. Mind you, I am not advocating that the occupants of these houses get bulldozed, and it's fine -- maybe better -- if most of the bulldozed houses are vacants. In fact, this plan needs those people not only to survive the bulldozing but to stay around and demand (in the economics sense, not necessarily the whining sense) replacement homes. This would eliminate the glut of housing that's paralyzing the housing market, thus stimulating direct activity in construction and lending.

There might be some drawbacks to this plan.

I also want to make clear that this fabulous bulldoze-millions-of-houses plan did NOT come from Paul Krugman. It's my brilliant scheme based on my own partial understanding of the situation.

Krugman blogs here. Read that.

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