Highly interesting. The US economy seems to be headed for a “fall”:http://ko.offroadpakistan.com/world/2003_08/iraqus_roundup.html, and Paul Krugman explains the whole situation well. This comment sums it up best: _”The emperor really has no clothes, and Krugman has been the first to say so.”_ The interesting thing is that Paul Krugman seems to be the first widely read journalist/writer to start talking about the US facing something akin to the “Great Depression”:http://www.amatecon.com/greatdepression.html unless the US govt. gets it’s act together and fast.
bq.. …Is Krugman merely someone who dislikes Bush and thinks his policies are horribly misguided? Oh no. In fact, in his most recent book, The Great Unraveling, he makes it clear that he thinks it’s *much, much worse* than that.
… but the general view is: yes, but this is America, it can’t happen, so something will come up. And I’m just willing to say I don’t see any noncatastrophic solution to this, I don’t see an incremental stepwise resolution. I think something drastic is really going to happen.
>> “CalPundit: Interview with Paul Krugman”:http://www.calpundit.com/archives/002170.html
p. And on on the other side, Daniel Drezner and a whole lot of posters “blast Krugman from here to Kingdom Come”:http://www.danieldrezner.com/archives/000734.html.
Note: Newsweek called Krugman a “future Nobel prize winner”:http://econ161.berkeley.edu/Economists/paulkrugman.html.
*Update:* Lots more doom and gloom by Krugman:
bq.. There is now a huge structural gap ? that is, a gap that won’t go away even if the economy recovers ? between U.S. spending and revenue. For the time being, borrowing can fill that gap. But eventually there must be either a large tax increase or major cuts in popular programs. If our political system can’t bring itself to choose one alternative or the other ? and so far the commander in chief refuses even to admit that we have a problem ? we will eventually face a nasty financial crisis.
The crisis won’t come immediately. For a few years, America will still be able to borrow freely, simply because lenders assume that things will somehow work out.
But at a certain point we’ll have a Wile E. Coyote moment. For those not familiar with the Road Runner cartoons, Mr. Coyote had a habit of running off cliffs and taking several steps on thin air before noticing that there was nothing underneath his feet. Only then would he plunge.
What will that plunge look like? It will certainly involve a sharp fall in the dollar and a sharp rise in interest rates. In the worst-case scenario, the government’s access to borrowing will be cut off, creating a cash crisis that throws the nation into chaos.
>> “NYTimes: Don’t Look Down By PAUL KRUGMAN”:http://www.nytimes.com/2003/10/14/opinion/14KRUG.html
p. *Update:* Another “interview with Paul Krugman at Alternet”:http://www.alternet.org/story.html?StoryID=17169 on November the 12th: New York Times columnist Paul Krugman tells how he found his voice, why Bush makes him miss Nixon, and why he insults Fox News whenever he can.