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TUESDAY, NOVEMBER 24, 2009
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US Must Save Global Economy —This Weekend

US must join UK's plan or face disaster: Krugman

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(Newser) – Since the collapse of Lehman Brothers the financial crisis has gone from severe to terrifying, but the response of the United States and Europe has been "woefully inadequate," writes New York Times columnist Paul Krugman. We are now at a tipping point, and if world policymakers don't come up with a coordinated plan—this weekend—then we may well experience the "worst slump since the Great Depression."

Europe's lack of political unity made joint action impossible, but the ill-considered Paulson plan was hardly better: buying up toxic assets won't do anything to stem the tide. Britain's move Wednesday to inject capital directly into banks in exchange for part-ownership is far better, Krugman writes, and now the US may do the same. This weekend, if there's any hope of staving off disaster, "the United States and Europe should just say 'Yes, prime minister.'"

Gordon Brown speaks at the House of Commons, London, Wednesday Oct. 8, 2008, after announcing a massive capital injection to troubled banks. At left is the chancellor, Alistair Darling.
Gordon Brown speaks at the House of Commons, London, Wednesday Oct. 8, 2008, after announcing a massive capital injection to troubled banks. At left is the chancellor, Alistair Darling.   (AP Photo/PA)
Britain's Chancellor of the Exchequer Alistair Darling is driven from the Houses of Parliament in London, after attending Prime Minister's Questions, Wednesday Oct. 8, 2008.
Britain's Chancellor of the Exchequer Alistair Darling is driven from the Houses of Parliament in London, after attending Prime Minister's Questions, Wednesday Oct. 8, 2008.   (AP Photo/Matt Dunham)
Britain's Prime Minister Gordon Brown, walks out to greet his Finnish counterpart Matti Vanhanen, unseen, on the doorstep of 10 Downing Street, in London,Thursday, Oct. 9, 2008.
Britain's Prime Minister Gordon Brown, walks out to greet his Finnish counterpart Matti Vanhanen, unseen, on the doorstep of 10 Downing Street, in London,Thursday, Oct. 9, 2008.   (AP Photo/Alastair Grant)
Treasury Secretary Henry Paulson speaks with reporters during a news conference at the Treasury Department Wednesday, Oct. 8, 2008 in Washington. (AP Photo/Evan Vucci)
Treasury Secretary Henry Paulson speaks with reporters during a news conference at the Treasury Department Wednesday, Oct. 8, 2008 in Washington. (AP Photo/Evan Vucci)   (AP Photo/Evan Vucci)
President Bush speaks as he stands on the steps of the Treasury Department with Henry Paulson after the House passed the $700 billion financial bailout at the White House on Friday, Oct. 3, 2008.
President Bush speaks as he stands on the steps of the Treasury Department with Henry Paulson after the House passed the $700 billion financial bailout at the White House on Friday, Oct. 3, 2008.   (AP Photo/Charles Dharapak)
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The British plan isn’t perfect, but there’s widespread agreement among economists that it offers by far the best available template for a broader rescue effort. And the time to act is now. - Paul Krugman, New York Times columnist

We have a globalized financial system in which a crisis that began with a bubble in Florida condos and California McMansions has caused monetary catastrophe in Iceland. We’re all in this together. - Paul Krugman, New York Times columnist

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