'Fairy Tale' of Austerity Is Finally Dead Paul Krugman: Europe realizing those policies made things worse By John Johnson, Newser Staff Posted Apr 27, 2012 12:50 PM CDT 90 comments Comments A cyclist passes one of Dublin's many unfinished and bankrupt private housing developments. (AP Photo/Shawn Pogatchnik) (Newser) – Paul Krugman doesn't use the words "I told you so," but he does pronounce the notion that austerity measures would fire up Europe's economy good and dead. European policy-makers had the misguided idea—one embraced by Republicans in the US—that cutting back on spending would spur confidence, he writes in the New York Times. Instead, we see nothing but "Depression-level slumps" all over Europe. The good news is that Europeans—witness the Netherlands elections, for example—are finally waking up, writes Krugman. "Suddenly, everyone is admitting that austerity isn't working." The bad news is that the policies in place probably won't change because of fear-mongering. "We're now living in a world of zombie economic policies," writes Krugman, and "it's anyone's guess when this reign of terror will end." Click for his full column.