Thoughts on Krugman's "Myths of Austerity"

An interesting and lively discussion is taking place over at zerohedge.com in response to Professor Paul Krugman's most recent article titled "Myths of Austerity".

I highly recommend perusing the comments that follow Leo Kolivakis's response to both Krugman and Niall Ferguson's alternative view expressed in a video interview on CNN (Krugman also is interviewed on the same program).

Some of the opinions I agree with:

1. Massive government stimulus spending is inefficient in terms of the economic bang for the buck.
2. I would prefer if Krugman spent more time discussing the 'quality' of government stimulus spending vs. always focussing on the 'quantity'.
3. Government investment and support in new technology development (e.g., sustainable energy) and public works (e.g., street lamps) can add economic value.
4. Japan is not necessarily in as bad of shape as the U.S. because, unlike the U.S., it is a surplus country (it produces more than it consumes) and its astronomical debt level (over 2x larger than the U.S.'s Debt/GDP ratio) is owed almost entirely to itself.
5. Most bond investors aren't interested in playing the role of 'vigilante' -- they simply want to earn an appropriate rate of return on their capital and see their principal returned.
6. While in the near-term it may be true that "the big, bad bond vigilantes are simply no match for the Federal Reserve and they know it. Bernanke can squash them like a bug". However, over a longer-term horizon there is not a central bank on earth -- not even the mighty Federal Reserve -- that can win if confidence in that country's scrip is lost.
7. Always framing the economic conversation around 'growth' or 'inflation' distracts from the very worthwhile economic goals of 'stability' and 'sustainability'.
8. "When we are unable to borrow money to buy new crap we will put more effort into maintenance of what we have" -Paul E. Math
9. It is likely that the U.S., unfortunately, will not make the necessary political decisions and take action until another crisis hits due to the short-term outlook and a lack of public pressure and political will.

And if you haven't already read it The Zero Hedge Conflicts/"Full Disclosure" Policy is pretty entertaining.