The co-host of CNBC's popular Squawk Box show, Joe Kernen blasted on Nobel laureate Paul Krugman for his controversial blog "Zombies on CNBC" after his appearance on the show. He also recited some of Krugman's horrible advice. For example, Paul Krugman had predicted in 1998 that "By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s.”
Not mentioned was also Krugman's explicit call during the dotcom bust for the Fed to lower rates and create a housing bubble. Krugman has long stated that the statement was not official advice.
Krugman appeared on Squawk Box show on Wednesday allegedly to talk about his new book. However, the hosts were more interested in discussing the current state of economy and the government's role. After being asked several times by the hosts, Krugman said he would allow government spending to go as high as 50 percent of GDP.
Warren Buffett, Erskine Bowles and Alan Simpson were also featured via satellite to discuss the economics and Simpson-Bowles tax plan. When Kernen told the trio that Krugman says 50 percent of GDP is acceptable government expenditure, all the three guests snickered. Kernen said, “I know! It’s laughable!” and tweeted (@JoeSquawk), "(Krugman) said 50 percent of GDP was the acceptable level of government spending. Best economy in his words a 'Free Market Welfare State.'"
As soon as the disappointed Krugman left the show, he went straight to his New York Times blog to attack CNBC:
"Wow. I just did Squawk Box — allegedly about my book, but we never got there. Instead it was one zombie idea after another — Europe is collapsing because of big government, health care is terribly rationed in France, we can save lots of money by denying Medicare to billionaires, on and on.
Among other things, people getting their news from sources like that are probably getting terrible advice about any kind of investment that depends on macroeconomics. But it’s amazing just how skewed the policy views are too."