Krugman On The Housing Crisis: "It’s Like Katrina To Say 'Let People Suffer'"

I can't think of a clip that more perfectly illustrates the difference between conservative and liberal philosophy than this one from today's "This Week." After George Will pretty much gives the finger to the scores of American homeowners now choking under the weight of their massive mortgages, Paul Krugman and Robert Reich smack him down and set him straight. Krugman offers an incredibly appropriate comparison to Herbert Hoover's Treasury Secretary and a spot-on analogy to Hurricane Katrina.

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Will: The Republicans have now put themselves in a bind because people now say look if you have Wall Street socialism, whereby you save Bear Sterns, or at least save JP Morgan to buy Bear Sterns, and you are thereby socializing the losses and keeping the profits private, why not help everybody. Soon we'll hear from everyone in the country who has a student loan. This is,it's a burden, help me.

Krugman: When I listened to McCain give that speech I immediately thought of Herbert Hoover's Treasury Secretary. Liquidate farmers, liquidate workers, liquidate real estate, purge the rottenness from the system. You can't do this. This is a major financial crisis. You've got to do something and that does include helping homeowners who were sucked in. You know it would be a little different if Alan Greenspan hadn't said you should all take out adjustable rate mortgages. It would be a little different if the administration hadn't said housing prices are going up. If they hadn't said there is no bubble. So this is a situation where a lot of people have been hurt. It's a natural disaster in effect. It's like Katrina, and to say oh let people suffer is like saying let those people who made the mistake of staying in New Orleans suffer.


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