Ironically, although Krugman does confess that part of "the reason why I am so depressed" is the he's not sure that stabilizing the financial market is "sufficient"...

I think he's right to be worried. The U.S. doesn't really have an economy anymore. For decades, it has consumed more than it produced and financed the difference with debt. Getting the banks back on their feet is pointless when there aren't enough potential borrowers who will use the loans to create wealth.

He was sure, till the end, that the "long boom" (a la george gilder) was going to last forever. However, economists, unlike traders, have "free speech" - they aren't responsible for their errors.

Obama, and Obama's boss Rahm Emmanuel and all of the muscle. So now he's on the bus.

The bits he wrote for CNBC (it could all turn around by the end of the year) and the Times (inflation warners are scaremongerers) were pretty embarrassing, the CNBC one moreso.

Now Paul explains that we can't have inflation because we're in a liquidity trap. What Paul misses is that throughout the Lost Decade Japan made things which it successfully sold to other people overseas. That and the Yen was always worth something to others.

Around late Autumn of this year, Paul is going to see what glaring domestic inflation and/or rising interest rates look like.

We're dead broke, we've rewarded corporations for offshoring high-paying jobs, we don't manufacture anything here any more except for rich executives. The "stimulus" (aka theft) is a joke, it's literally a drop in the bucket.

Banks STILL have not owned up to their exposure to worthless paper debt. No one can honestly believe that a shack in Compton CA is honestly worth $400,000.

God knows I'm no Nobel Prize winner, but I'm thinking that getting our dicks out of Afghanistan and Iraq might just be a bright idea. We cannot afford to beat the shit out of the world whenever we feel like it.

Even the most ardent, brainwashed Obama supporters must be experiencing the "itchy feet and fading smiles" sense of disappointment as NOTHING CHANGES. We've been duped again.

Come 2012, if we're still here, a populist President would be a refreshing change, Jesse Ventura, perhaps. How do you fix a broken, entrenched system like Washington DC?

I'll bet.

The most prominent people arguing for a long period of stagnation, an "L" shaped economic path, are the Marxists at Monthly Review, chiefly John Bellamy Foster and Fred Magdoff. Not Paul Krugman, who as other letter writers note, has now been house-trained after peeing on the Obama carpet. Foster & Magdoff wrote a very short but succint book, "The Great Financial Crisis," explainign that the 30 year financialization boom of the U.S. and world economic system was due to an underlying stagnation in 'productive' profits. And that this crash is going to bring the economy back to that fact, and a long period of stagnation at best.

On another note, the banks are not making deals with homeowners because it would make them quantify the losses on their loans - especially if they wrote down the principal owed. So they will be stiffing homeowners for as long as possible, and keeping the bogus properties on their books. Which only lasts for awhile, of course. That is why there is only ONE loan servicer in the U.S. (featured on NPR's "This American Life" - April 15, No Map) able to calculate how keeping homeowners in their houses actually is MORE economically profitable than letting them be evicted. NPR also pointed out that the sheer volume has overwhelmed banks who's only skill was loan intake.

http://www.guardian.co.uk/business/2009/jun/14/economics-globalrecession

I'm not sure why you assumed Krugman wasn't an Obama supporter, Andrew. Everything I've ever read from Krugman, on the subject of the "New Deal" style stimulus package, has always been overwhelmingly supportive of Obama. However, he has remained consistently skeptical of the Geithner's economic plan concerning the financial industry... a skepticism shared by most economists and industry professionals. Either you don't understand the specific argument Krugman (and others) are making against Geithner's handling of the banking debacle or you have a problem with any perceived criticism of Obama's economic agenda in the first place. Whatever your difficulty, Krugman has always been supported of Obama's "Great Society" agenda and it's a tad disingenuous to claim he is "beginning to warm up" to a president with whom, ideologically, he has had no quarrel.

I assumed that my Guardian interview couldn't possibly be the same one posted for this article. Imagine my amazement when I realized it was, indeed, the same one. How on EARTH do you come away from that interview with the understanding that Krugman is "warming up" to Obama when it is chalk FULL of other more pertinent information?? Did you simply skip to the bottom of the article without reading the rest?

How could you ignore this exchange:

WH: So where are you on the debate about various shape recoveries? V-shaped? L-shaped ? A W-shaped recovery?

PK: There is a possibility that we get some perk-up as the stimulus dollars start to flow and an almost mechanical bounceback in industrial production as inventories are built up. But then we slide down again. The idea that we sort of bounce along the bottom is all too easy to imagine.

WH: Is it just a story about the right dose of fiscal policy? What structural change would you advocate in the economy, to support recovery?

PK: Financial regulation. Rein in that monster. The huge increase in general private-sector leverage is at the core of how we got so vulnerable. We went for 50 years after the Great Depression without any major financial crises, and that, I think, was because we had a financial sector that didn't let people get as deeply into debt as they have now.

Sometimes, Andrew, you make me seriously wonder if you're up to the task of writing intelligently about this subject.

and she didn't fall. She just adjusted her priorities after the runaway success of 90210. As if!