Krugman: Don’t Cry for Me, America

[RamboLiberal]

Mexico. Brazil. Argentina. Mexico, again. Thailand. Indonesia. Argentina, again.

And now, the United States.

The story has played itself out time and time again over the past 30 years. Global investors, disappointed with the returns they’re getting, search for alternatives. They think they’ve found what they’re looking for in some country or other, and money rushes in.

But eventually it becomes clear that the investment opportunity wasn’t all it seemed to be, and the money rushes out again, with nasty consequences for the former financial favorite. That’s the story of multiple financial crises in Latin America and Asia. And it’s also the story of the U.S. combined housing and credit bubble. These days, we’re playing the role usually assigned to third-world economies.

For reasons I’ll explain later, it’s unlikely that America will experience a recession as severe as that in, say, Argentina. But the origins of our problem are pretty much the same. And understanding those origins also helps us understand where U.S. economic policy went wrong.

http://www.nytimes.com/2008/01/18/opinion/18krugman.html?hp

[tom_paine]

1. K & R

[papau]

2. He nails it - again

[RuleOfNah]

3. I call it The Shock Doctrine.

Because that is what it is, as Naomi Klein described in detail in her book.

Their policies didn't go wrong, they were designed to do what they are doing.

[katty]

4. krugman, as always, spot on...this storm has been brewin' for

a long while.

[Doctor_J]

5. Here is a telling sentence

The real sin, both of the Fed and of the Bush administration, was the failure to exercise adult supervision over markets running wild.

Unfortunately, as with every other supposedly independent part of the government, there is no difference between the Fed and the Bush administration. There is no way Berancke or Greenspan was ever going to contradict *.

[Dudley_DUright]

6. Considering Krugman is a specialist in international economics

and has extensively studied all the countries he mentions, you can take whatever he says about our current situation to the bank (so to speak).