Tweaking Paul Krugman

The Nobel-winning economist pays $1.7M in a real estate market he believes will fall until 2011.

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It's rare that anyone gets to tweak Paul Krugman on his home turf of economics. So the Nobel winner's purchase of a $1.7 million co-op in New York--despite his own predictions that real estate prices in the city would continue to tumble--presented too ripe an opportunity to pass up.

Max Abelson of The New York Observer broke the news, and squeezed in a little mild ribbing:

Even though the couple bought their place at a big discount--it was listed early last year for $2,495,000, which became $2,199,000 and then $1,850,000--it's slightly odd that Mr. Krugman, whose cynicism about the American housing market is not a secret, would want to buy something now.

The passage he's referring to is Krugman's opinion, stated only one month ago, that housing prices will fall "a long way" until they start recovering in 2011.

Joe Wiesenthal, a blogger at Business Insider, spun Krugman's purchase another way. He interpreted it, half jokingly, as a signal to "go long New York real estate." This might not be such a bad guess. In 1996, Krugman prognosticated the next 100 years of the economy, and made a bet that big cities--and particularly Manhattan--would win:

At the beginning of the 1990s, there was much speculation about which region would become the center of the burgeoning multimedia industry. Would it be Silicon Valley? Los Angeles? By 1996 the answer was clear; the winner was ... Manhattan, whose urban density favored the kind of close, face-to-face interaction that turned out to be essential.

Even when jumping on a bit of self-contradiction, Krugman's economic critics--compared to the acrimonious attacks he receives in his guise as a left-wing pundit--are mild and good natured.

This article is from the archive of our partner The Wire.