http://www.lewrockwell.com/…

Given the horrible state of the economy and the idiocy coming from mainstream economists, I would have thought that nobody would win the Nobel Prize in Economics this year. Instead, the Swedish Central Bank and its minions have awarded this prize to none other than Paul Krugman.

That’s right, a man who gave up economics long ago in order to become a political operative now wears the title of “Nobel” winner.

STOCKHOLM, Oct 13 (Reuters) - American economist Paul Krugman won the 2008 Nobel prize for economics for bringing together analysis of trade patterns and where economic activity takes place, the prize committee said on Monday.The Royal Swedish Academy of Sciences said the prestigious 10 million crown ($1.4 million) prize recognised Krugman’s formulation of a new theory to answer questions driving world-wide urbanisation.

“He has thereby integrated the previously disparate research fields of international trade and economic geography,” the committee said in its statement.

Just as the Nobel people committed fraud last year giving its Peace Prize to Al Gore (who advocates violence against people who burn coal), the Nobel in Economics this year goes to a person who has no understanding whatsoever of prices and markets.

Unfortunately, he now will be in an even greater position of influence, a man who has declared publicly that we need another “New Deal,” and a man who believes that FDR lifted the economy out of the Great Depression. A man who believes war is good for the economy. A man who rarely says an intelligent thing in his column.

Indeed, this is another dark episode in economics. Prepare for many more, as Krugman now is going to have a prominent place in the upcoming Obama government.

Krugman now will be on the same level as the truly deserving economist F.A. Hayek? Sad. This man needs no more influence in the world. In the long run it can only be negative.

http://www.reuters.com/…

The U.S. Securities and Exchange Commission issued an emergency order on Friday temporarily halting the short selling of 799 financial stocks in an effort to protect investors and markets.

The measure underscores growing concerns that short-selling has led to sharp declines in U.S. and European financial stocks since the onset of the credit crunch.

“The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets,” SEC Chairman Christopher Cox said in a statement. “This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.”

As Bill Anderson over at the Lew Rockwell blog has said:

The last line is a howler worthy of Paul Krugman’s twice-weekly missives in his New York Times column. The SEC is not “restoring” equilibrium; it is preventing equilibrium.

It seems that policy makers are making the same terrible errors committed by the Hoover and Roosevelt administrations during the 1930s. (The Daily Kos, a popular Democratic blog, is calling for a “New New Deal.” Frankly speaking, we are not rid of the old New Deal.) The government wants us to believe that the real problem is falling prices, so if the government can prop up prices of assets by any means, then it is doing us a favor.

Remember that Carl Menger wrote in his wonderful Grundsatze that “all things are subject to the law of cause and effect.” Indeed, Menger’s words live here; falling prices are an effect, not a cause. Short sellers and others who are helping to drive down asset prices are restoring the markets to their natural equilibrium, not preventing it. Unfortunately, the SEC is channeling Hoover and FDR, and they are preventing the economy from recovering.

The more they tinker… the more pain we will end up in.