Strange bedfellows. I've said it since day 1. Krugman was right about the bailouts and wrong about everything else. In his latest column, he's right again. And then horribly, horribly wrong.
Krug nicely delineates the issue then loses all credibility with his call for more stimulus and huge deficits to spur job growth. That part won't work. We've had nothing but stimulus since 2007 and nothing to show for it. Extend and pretend can't work if you don't have the dough, and even then the odds are stacked against you. Deleveraging from 40-1 is a bitch, even when the Fed is buying, and Brian Sack is drunk on the trading floor.
The problem as we've written many times is political. Politicians can't handle truth or recessions. The corporate and state solution should involve cutting back, regrouping, paring un-needed expenses and preparing for future growth not based on insanely cheap and flippant credit. Our corporations have perfected it; our governments (local, state, federal) -- not so much.
What we get from Washington instead are endless attempts to re-blow an unsustainable, unrealistic, debt-laced, bubble economy. It popped and there's a big fu^king hole in the side. It will not inflate. Look at Japan and stop. Just stop. Force banks to deal with the crap assets. Do not ignore the problem or we'll be talking about stimulus #30 in 2017, still wondering why the economy is sputtering, and debating which leg of the WWW economic curve might be right around the corner.