Newt Gingrich may not be reading New York Times columnist Paul Krugman's columns very carefully.

On Monday, Gingrich appeared on Bill O'Reilly's Fox News show and said that President Barack Obama's tenure in the White House "is a Paul Krugman presidency."

"He believes that stuff. He actually believes in left-wing economic idea. The only problem with them is it doesn't work," said Gingrich. "All the advisers he has and ideas he has are wrong."

LOS ANGELES (MarketWatch) -- Chinese credit-rating agency Dagong Global Credit Rating Co. on Wednesday again downgraded U.S. sovereign debt and warned of further such moves, the state-run Xinhua news agency reported, though the action was unlikely to affect markets.

Dagong cut U.S. Treasurys to A from A+, with a negative outlook, saying growth in U.S. debt is still outpacing revenue growth.

The latest move followed a Dangong downgrade of U.S. debt from AA to A+ in November, citing the launch of the Federal Reserve's second round of quantitative easing.

"The agency said the approval to raise the debt ceiling indicated that there will not be any positive changes in factors that will influence the country's debt-paying ability in the long run," Xinhua reported.

The precise economic benefit of encouraging people to use such expensive pillow-stuffing escapes me. But perhaps that is because I am crass and shrill.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

Seems kinda silly.  But I'm not an economist.

Ever since I learnt about confirmation bias I've started seeing it everywhere

All those French and German banks better start thinking about topping up their equity

With regard to price developments, euro area annual HICP inflation was 2.5% in July 2011, following 2.7% in June. The relatively high inflation rates seen over the past few months largely reflect higher energy and other commodity prices. Looking ahead, inflation rates are likely to stay clearly above 2% over the coming months. Upward pressure on inflation, mainly from energy and other commodity prices, is also still discernible in the earlier stages of the production process. It remains of paramount importance that the rise in HICP inflation does not translate into second-round effects in price and wage-setting behaviour and lead to broad-based inflationary pressures. Inflation expectations must remain firmly anchored in line with the Governing Council's aim of maintaining inflation rates below, but close to, 2% over the medium term.

Risks to the medium-term outlook for price developments remain on the upside. They relate, in particular, to higher than assumed increases in energy prices. Furthermore, there is a risk of increases in indirect taxes and administered prices that may be greater than currently assumed, owing to the need for fiscal consolidation in the coming years. Finally, upside risks may stem from stronger than expected domestic price pressures in the euro area.

"Developments in the sovereign bond markets of Italy and Spain are a cause of deep concern. These developments are clearly unwarranted on the basis of economic and budgetary fundamentals in these two Member States and the steps that they are taking to reinforce those fundamentals. In fact, the tensions in bond markets reflect a growing concern among investors about the systemic capacity of the euro area to respond to the evolving crisis.

The systemic nature of the sovereign debt crisis was recognised by the Heads of State and Government of the euro area at their meeting of 21 July. At that meeting, a unique solution for the crisis in Greece was found involving a partnership between the official and private creditors, but it was agreed that private sector involvement would not be a standard feature of the euro area's crisis management. Agreement was also reached on ground-breaking measures that will reinforce the euro area's systemic response to the crisis by enhancing the effectiveness of the European Financial Stability Facility (EFSF), by reforming euro area governance structures and by adapting our working methods to the needs of crisis management with each institution playing its part. It is essential, therefore, that we move forward rapidly with the implementation of all of that has been agreed by the Heads of State and Government and send an unambiguous signal of the euro area's resolve to address the sovereign debt crisis with the means commensurate with the gravity of the situation.

The necessary technical work to implement the measures agreed on 21 July is already underway and will be completed as a matter of urgency. The Commission services are actively supporting the Member States in this technical work. Implementation of some of these measures will also require actions by national parliaments and today I am writing to the Heads of State and Government urging them to ensure that these actions are taken without delay."

The second question is whether the market for US Treasury 30 year bonds could absorb a 30 tn issue. The answer to that is "who cares?" The market for US treasuries serves no economic function, so you can simply fix the interest subsidy rate you want to pay to lazy money for hiding cash in their pillows, and then see how much lazy money gets put in bonds and how much stays in the mattresses. The real economy won't care one way or the other.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

Let's say you wanted to finance a stimulus (none / 0)
of maybe $1 trillion by exploiting the very low 30 year rates. Could that be done, I mean, issuing $1 trillion of 30 year bonds without screwing up that part of the bond market (ie radically increasing rates)?

Even better would be for the Treasury to simply finance renewable energy projects by simply crediting the accounts of the contractors on an ongoing basis. The only real "danger" would be driving up the cost of labor, which is not going to happen until there is close to full employment amongst those who can do such work. Even then that would be a benefit, not a problem, as the average wage for labor has been stagnant or declining for decades.

But that may be too much spent on a given sector. It might be better to spend that money over a few years and also spend on education, health care, and other needed investments. IIRCC, Robert Reich and others noted back in Jan '09 that the $700 billion stimulus was too little. I believe they indicated that about $2 trillion was needed. We spent far more, but all but the stimulus was directed to the financial sector.

If some bloggers are to be believed, this is being used by favored TBTFs to drive up the prices of stocks and commodities and, in particular, to prevent the markets from going down, (the Plunge Protection Team), and keep precious metals from going up, (Blythe Masters at JPM and other organizations).  The stock market going up gives the impression of a good economy, but not the substance. Many people would take the price of precious metals going up as an indication of devaluation of the US$.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."