Paul Krugman says that power usage is down in Iraq and that Bechtel did not finish the job on reconstruction. Krugman, as usual, takes a logical leap for the jugular.

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Back on September 17, Paul Krugman said we are in a housing bubble. I don’t think so. Here’s what I said then. Tomorrow, Krugman says we are still in a bubble:

There’s a lot of evidence that home prices, although they’ve started to decline, are still way out of line. Spending on home construction remains abnormally high as a percentage of G.D.P., because banks are still lending freely in spite of rapidly rising foreclosure rates.

In the rest of the world, real estate commissions are only 1.5-2%. For historical reasons, we will be stuck with 3.75% commissions to 4% commissions. Why? The same reason Discovercard pays a cash back bonus instead of trying to undercut Visa and Mastercard’s rates to vendors. The retailers price so that they will make a profit with Visa and Mastercard. Visa and Mastercard require their merchants not to charge a surcharge for using Visa or Mastercard to pay. Regardless of whether it’s wise, it’s stuck. Therefore, expect that it will stay. Nevertheless, Discovercard kicks back 2% of their 2.9% merchant fee to the customer. Google is doing the same with it’s merchant charge scheme. Charge only a little less than the other gateways charge, but give it back in free ads. Nice!

The way this will play out in real estate commissions

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Paul Krugman rants in tomorrow’s Times about how the Democrats should speak up if they win the House. Last week, he said this means spending 10% of the House’s floor time investigating the administration. This time he added Nancy Pelosi’s agenda item:

according to opinion polls, most Americans are actually to the left of Congressional Democrats on issues such as health care.

In particular, the public wants politicians to stand up to corporate interests. This is clear from the latest Newsweek poll, which shows overwhelming public support for the agenda Nancy Pelosi has laid out for her first 100 hours if she becomes House speaker. The strongest support is for her plan to have Medicare negotiate with drug companies for lower prices, which is supported by 74 percent of Americans — and by 70 percent of Republicans!

The first problem with this proposal is that Medicare has been captured by the drug companies and if they are empowered to do price controls, they will push prices up rather than down. Legislating lower prices is like trying to legislate the value of pi to be 3. It doesn’t work.

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Paul Krugman is stirring people up with demagoguery today. He says that executives are making “367 times the average worker’s pay” and says that “The moral of the story is…we’re still waiting for serious corporate reform.” He ends with gloom and doom: “And don’t tell me that everything must be O.K. because stocks have been rising lately. Remember, they rose even faster in the 1990’s — and the 1920’s.” implying that we have a new stock bubble with the 1920’s comment–one that will inevitably crash like things did in 1929. This stirs people up about people getting paid too much which is something that causes Democrats to get madder than Republicans.

Let’s untangle today’s multiple untruth and propose some real reform.

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Tradesports has a security that pays $1 for a Republican House trading at $0.301 when I checked. Here’s a graph of closes. What does Paul Krugman know that the market doesn’t? This graph updates daily. The link real time.

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Paul Krugman yesterday joined Anti-Krugman in noticing that the Iowa Electronic Market is still predicting Republicans can hold onto the House of Representatives, but may lose it. This is more precise than “the whole thing falls apart” from 10/2. In yesterday’s trading, a security and a combination of two other securities that paid $1 if Republicans lose the House was trading at an average of $0.60. On TradeSports today, the security that will pay $1 if the Republicans keep the House is trading for $0.329. The punters are saying the Republicans will likely lose the house.

Krugman also joined Anti-Krugman in attributing the moderation in Republican losses to Republican drawn House districts. That is, Republican state houses drew electoral maps so that Democrats are concentrated in nearly 100%-Democrat districts. Then a large number of modest-majority Republican districts are drawn. The Republicans may have overreached here. By trying for a larger majority, they may yet allow Democrats to take away the majority altogether.

If Krugman and anti-Krugman hold the same position, will there be a tremendous explosion?

Are we winning in Iraq? The strategy page lists the number of US soldier deaths (see chart). The 12-month moving average went as low as 45, then up to 80, then down to 63. At 63/month it will take 904 months or 75 years for the deaths in Iraq to equal the deaths in Vietnam. Can we not afford 63 out of 200,000 deaths and 350,000 births in the United States every month to spread freedom overseas?

Iraq paid suicide bomber families money if they killed themselves. In 2002, this contributed to an average of 74 Israeli deaths per month from terrorism. Should we maybe have just let Israel destroy billions of dollars of Iraqi infrastructure instead and left the Saddam Hussein government in place? (more…)

Paul Krugman starts out his column, “The War Against Wages” (subscription required):

Should we be cheering over the fact that the Dow Jones Industrial Average has finally set a new record? No. The Dow is doing well largely because American employers are waging a successful war against wages.

Actually we should be cheering. Good deployment of labor and capital improves productivity and makes everyone richer including labor. (more…)

Over at nytimes.com Paul Krugman writes two weekly columns. I recommend buying a subscription to the New York Times and going on vacation often if you like to read the Times Select columnists on the cheap. I think Krugman needs a regular counterpoint to keep him on his toes. Often the opposite message is more compelling. I am writing a column that tries to give the contrary view of Krugman’s topics.

At its core, the political axis that currently controls Congress and the White House is an alliance between the preachers and the plutocrats — between the religious right, which hates gays, abortion and the theory of evolution, and the economic right, which hates Social Security, Medicare and taxes on rich people….

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