On Krugman's Latest Rant - Other Opinions

Courtesy of Instapundit from Scrivener.net:

"Yet again Paul Krugman attacks private accounts for Social Security with the claim that returns in stocks will be not high enough and 'risky'."

"And who does Krugman choose to invoke as an authority for his argument? Why, who could be more impressive than the academic world's most noted advocate of stocks as a long-term investment, Prof. Jeremy Siegel of Wharton... That's why even Jeremy Siegel, whose 'Stocks for the Long Run' is often cited by those who favor stocks over bonds, has conceded that 'returns on stocks over bonds won't be as large as in the past.'

But a very high return on stocks over bonds is essential in privatization schemes... Yet wait a minute. With Krugman (not to mention the other NY Times op-eders) you can never trust a quote. Let's do a quick Google search. Yes, here's what Siegel actually said ... 'I agree that returns on stocks over bonds won't be as large as in the past. But I'm more optimistic than Rob. Looking over the next quarter-century, I see a 5%-to-6% return on stocks, adjusted for inflation. I'm pessimistic about real bond returns. I think they're likely to be in the 0%-to-1% range over the next five years, and closer to 3% after that...'

My gosh! In support of his argument that the spread between bond and stock yields must close so that stocks cease to be a more attractive investment than bonds, Krugman quotes Jeremy Siegel arguing exactly the opposite in Forbes, making the case for stocks as a better long-term investment than bonds."