Mr. Krugman makes so many amateurish mistakes in that piece that I am a little embarrassed for him.

Perhaps the most obvious is that he seems to equate the Dow with the economy. The equities market is a small piece to the economic pie. The bond market is a much larger piece, but even put together they are not "the economy". Sometimes they reflect the economic conditions, sometimes they don't.

He makes the mistake of claiming that workers aren't participating in their own productivity gains through stockmarket activity. The majority of people out there actually do participate in the stock market, even if they don't realize it. Anybody who has a mutual fund or some kind of retirement account is likely to have some mix of stocks and bonds in it. Those evil corporations are funding our collective retirements.

He also makes the mistake in presenting the Dow Industrial average as being indicative of anything. The Dow is 30 hand picked stocks that picked specifically to over perform.

The S&P 500 is testing it's all time high for the third time.
S&P 500 - 1960 to present

The NASDAQ is still only about 66% of it's all time high
NASDAQ 1978 to present

Meanwhile, the New York Composite isn't even close to it's 2007 high.

He's right that wall street pundits can barely predict the weather one hour in advance. But who did wall street support in 2008? Hint Hint, they weren't wearing red.

More later on the Krugman piece. It deserves a spotlight.