Paul Krugman: The Market Speaks

Four years ago, as a newly elected president began his efforts to rescue the economy and
strengthen the social safety net, conservative economic pundits — people who claimed to
understand markets and know how to satisfy them — warned of imminent financial disaster.
Stocks, they declared, would plunge, while interest rates would soar.

Even a casual trawl through the headlines of the time turns up one dire pronouncement after
another. “Obama’s radicalism is killing the Dow,” warned an op-ed article by Michael Boskin, an
economic adviser to both Presidents Bush. “The disciplinarians of U.S. policy makers return,”
declared The Wall Street Journal, warning that the “bond vigilantes” would soon push Treasury
yields to destructive heights.