US Must Save Global Economy —This Weekend

US must join UK's plan or face disaster: Krugman
By Jason Farago,  Newser Staff
Posted Oct 10, 2008 7:30 AM CDT
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)
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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.'"