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Reality is hard: Obama’s favorite economic reporter Paul Krugman uses ‘It’s a Wonderful Life’ bank to slam Romney!/GPollowitz/status/204952085328969728

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And the ever-wrong and unemployable David Shuster joins in.

@GPollowitz Is @DavidShuster pimping out @paulkrugman or vice versa…? Lost track of Shuster since MSNBC and KO firing. Hope he's well.

— Max (@MHB2012) May 22, 2012

Stunning to hear @mittromney get banking so wrong. Must read/RT @paulkrugman on JP Morgan, Dimon, + Romney.

— David Shuster (@DavidShuster) May 21, 2012

Oh, dear. As Twitchy reported last month, President Obama calls Paul Krugman “one of the smartest economic reporters out there.” Good grief!

While accusing Mitt Romney of not understanding banking, he uses a fantasy from a movie as an example of how one should understand banking. No, really.

Here’s what the presumptive Republican presidential nominee said about JPMorgan’s $2 billion loss (which may actually have been $3 billion, or $5 billion, or more, but who’s counting?): “This was a loss to shareholders and owners of JPMorgan and that’s the way America works. Some people experienced a loss in this case because of a bad decision. By the way, there was someone who made a gain.”

What’s wrong with this statement? Well, suppose that someone — say, Jimmy Stewart in the movie “It’s a Wonderful Life” — runs a bank that takes in deposits and invests the money in various ways. And suppose that one of those investments is a risky bet on some complex financial instrument, with Mr. Potter, the evil plutocrat, on the other side.

If Jimmy Stewart’s bet pays off, we’re in Romneyworld: he’s made money, Mr. Potter has lost money, and that’s that. But suppose Jimmy Stewart loses his bet. If the bet was big enough, he no longer has enough assets to pay off his depositors. His bank collapses, probably in a chaotic bank run that takes down the whole town’s economy as collateral damage. Mr. Potter makes money on the deal, but so what?

For Paul Krugman, not only is math hard but reality is hard. Twitter users were quick to correct the “smartest economic reporter out there.”

#IStandWithObama because "every economist" …ie: @paulkrugman says spend more money!!!!! #epicfail

— Elle (@LMBigSur) May 22, 2012

@DavidShuster @mittromney @paulkrugman 1. JP Morgan slightly more complex that Jimmy Stewart's bank. 2. Dimon was in the mix for treas sec

— Greg Pollowitz (@GPollowitz) May 22, 2012

@DavidShuster @mittromney @paulkrugman 3. Geithner was head of NY Fed, in charge of regulating AIG. How'd that work out? 4. Corzine & MFG

— Greg Pollowitz (@GPollowitz) May 22, 2012!/MediaTopCop/status/204687628895928320

Still looking forward to Dems speaking against banks at the Bank of America center in the right to work and anti gay marriage state of NC

— Greg Pollowitz (@GPollowitz) May 22, 2012

That will be giggle-snort worthy!

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