Krugman’s blog, 3/1/16

How on earth did it get to be March already?  There were two posts yesterday.  The first was “Europe Stalls:”

I’ve been saying for a while that Europe and the US are locked in an intense competition, to see which of these huge, powerful, rich, sophisticated societies could screw up most. For a long time Europe seemed to be winning that competition, but recently the “deep bench” GOP has given America a big boost.

Still, Europe is by no means out of the running. It has been hard even for rootless cosmopolitans like me to focus on their woes while we have our local freak show, but things are going amazingly wrong over there. The refugee crisis tops the list, probably followed by the risk of Brexit. But the good old economic woes of the eurozone are still there.

There was a bit of a false dawn there, as overall growth finally returned in 2014-2015, and the risk of deflation seemed to recede. But in my inbox this morning, Eurointelligence points out that core inflation seems firmly stuck below one percent, and Gavyn Daviesreports that “nowcasting” shows a sharp slowdown.

What’s going on? Basically, “morning in euroland” — such as it was — reflected one-time developments that are now in the rear-view mirror.

First, there was the stabilization of financial markets after Draghi’s “whatever it takes”.

Then there was the end of ever-intensifying austerity, removing a big drag on growth:

Finally, there was a boost from the weakening of the euro (which I would attribute to market perception that Europe will stay weak indefinitely):

All that is now past, so Europe can return to its normal state, which sure looks like secular stagnation.

The second post yesterday was “Pathos of the Reformocons:”

Remember the reformocons (aka reformicons)? For a while they were supposedly a hot trend in Republican politics, right up there with the libertarian moment. Their big hero was Marco Rubio, who said nice things about some of their ideas.

In fact, the ideas were mostly terrible. But perhaps more to the point, there turns out to be no constituency at all for reformocon ideas. Rubio seems likely to be remembered, if at all, as the man who temporarily persuaded the media that third place means you’re winning. And anyway — well, consider this from Reihan Salam:

Folks Before Kochs

To save itself, the Republican Party must finally put the working class ahead of the donor class.

Juxtaposed with this:

Paul Singer, the influential New York billionaire who endorsed Marco in October, is slated to be named his NATIONAL FINANCE CHAIRMAN at a quarterly gathering of Rubio donors in Miami on March 10, a campaign source tells POLITICO’s Mike Allen.

If you don’t quite remember who Singer is, he’s famous in economics circles for insisting that inflation was coming, because

Check out London, Manhattan, Aspen and East Hampton real estate prices, as well as high-end art prices, to see what the leading edge of hyperinflation could look like.

Sorry, there is no reform constituency within the GOP.

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