Depression

by digby

Paul Krugman’s essay in the NYRB called, aptly, “What to do” is a must read. It lays out the challenges ahead and his prescriptions for what must be done. He says we are living in a period of “depression economics,” which is particularly depressing for people my age and older… I guess we deserve it, but still.

One of the potential upsides of all this, however, is something I haven’t heard much discussion about. Krugman argues that the financial system can only be rescued with strong coordination with other countries:

All these actions should be coordinated with other advanced countries. The reason is the globalization of finance. Part of the payoff for US rescues of the financial system is that they help loosen up access to credit in Europe; part of the payoff to European rescue efforts is that they loosen up credit here. So everyone should be doing more or less the same thing; we’re all in this together.

Financial globalization, international terrorism and climate change are very modern crises in which notions of superpowers and even nation states are insufficient to solve. Perhaps some good leadership and seriousness of purpose can create some new institutions or at least understandings of international cooperation for the good of the planet. There was a moment after 9/11 which could resulted in this that was completely destroyed by the belligerent, irrationality of the Bush administration. Perhaps something better will come this time.

It’s not much to hang on to, but it’s something.