Listen to Paul Krugman in the first video with Bloomberg and then listen to Dennis Gartman in the second. The two seem to be arguing the same point – that the G-8 austerity position of higher taxes and lower government spending is the wrong medicine for the global economy. It sounds to me like, the two are both calling for deficit spending.
Seriously, I thought I was listening to Paul Krugman for the first half of the Gartman interview with Bloomberg. Then Gartman got this question:
"Does that mean you would rather see the continuation of stimulus, the continuation of jobless benefits, the continuation of housing credits there?"
I think that’s when he realized that he sounded like Paul Krugman, blanched, and switched into reflexive tax cutting rhetoric. Listen to what he says and how he responds to the question. It is not nearly as fluid as his prior remarks. He was clearly caught off guard by something. It’s only when he goes into the tax-cutting rhetoric that he regains his normal speaking cadence.
What is clear from the videos, however, is that there is overlap in the positioning between these two.
- Full-bore austerity risks a 1937-style relapse (both Gartman and Krugman make the 1930s reference)
- The longer-term fiscal position of the US government is challenging
It sounds to me like they are making the "Resource Hawk, Stimulus Dove" types of arguments Mark Thoma and Nouriel Roubini have made; they want to go easy on the austerity in the short-term and concentrate on fixing the longer-term issues (like health care). To me, this makes sense.
There has to be some economic policy fix that allows both Krugman and Gartman to get what they want.
P.S. – Despite the anti-stimulus rhetoric, I do think this is the argument that the Germans are making on fiscal consolidation. Nevertheless, the global economy is slowing very quickly based on recent data. Withdrawing stimulus puts us at stall speed very quickly.