Paul Krugman confronts the lead of to the economic crisis that we are now in, in his article Revenge of the Glut, seen in The New York Times. Krugman agrees with Ben Bernanke who said that the reason for the US falling economy lies in Asia. When the Asian economies started to fall, they gathered foreign assets putting their capital into the world. This capital was cheap and led to the trade deficit that we now have. Other small European countries also are running into this problem.
This fast inflow of money made investors feel like they were secure. This led to the buyers feeling like they would be fine to buy. But this quickly fell as we realized the problems we had created from the imports. Now people are losing their homes and struggling to pay off loans. So no one is investing anymore, causing the economy to rapidly fall. If something doesn't happen soon our economy is going to crash and burn. We can only hope that Obama's stimulus package will inject the money that we need into the economy.
