The Return of Depression Economics and the Crisis of 2008

The Return of Depression Economics and the Crisis of 2008

By Paul Krugman Norton; 191 pages

Frantic Bookstore customers should be forgiven for riffling through the pages of this slim book. After all, this is the new Nobel laureate in economics addressing the main--perhaps only--topic of conversation these days. But Krugman's assessment is only partly reassuring: "We're not in a depression now, and despite everything, I don't think we're heading into one (although I'm not as sure of that as I'd like to be)." In this updated and revised edition of his prescient 1999 book, the author shows how the Asian and Latin American financial crises of the 1990s foreshadowed the current situation and argues that the rise of unregulated financial institutions--or "shadow banks"--since then has been the real problem. The solution: Policymakers around the world need to "get credit flowing again and prop up spending." Until that happens, though, it's time to hunker down and "relearn the lessons our grandfathers were taught by the Great Depression."

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