I stumbled across this comment from Thorolfur Matthiasson on Paul Krugman’s blog. It explains the current situation in Iceland perfectly: Finally, there are many big unsolved problems that face the government and people of Iceland. First, the Icelandic Krona is not a viable currency in the world of free movement of capital. The Euro seems [...]

I am glad Jon Danielsson got this so quickly… on Paul Krugman’s misunderstanding of the Icelandic situation: Krugman please  get your facts right. Iceland did not devalue, the currency fell. This is not the kind of capital controls that often can be a sensible policy. These capital controls were imposed  only to lock in carry [...]

And a strange thing has happened: although Iceland is generally considered to have experienced the worst financial crisis in history, its punishment has actually been substantially less than that of other nations. Paul Krugman in NY Times

I’d be more sanguine about all of this if there were any indications that private, final demand is taking off — consumers, business investment, whatever. But I haven’t seen anything suggesting that sort of thing. The chances of a relapse into recession seem to be rising. I’d be more sanguine about all of this if [...]

If you only read one opinion column this year, this is the one you should read. And then you’ll never have to listen to people like Hannes Holmsteinn Gissurarson ever again. It is long but it should be required reading. Paul Krugman in the NY Times So here’s what I think economists have to do. [...]

Reagan was wrong. State spending is all that has stopped America’s slump becoming catastrophic Paul Krugman in the Guardian

For a while, the inrush of capital created the illusion of wealth in these countries, just as it did for American homeowners: asset prices were rising, currencies were strong, and everything looked fine. But bubbles always burst sooner or later, and yesterday’s miracle economies have become today’s basket cases, nations whose assets have evaporated but [...]

Prof Krugman, who was awarded the Nobel Prize in economics in 2008, made his remarks during a question and answer session with foreign journalists in New York on Tuesday. He was asked by an Austrian journalist about the possibility of Austria being bankrupted by its banking system’s exposure to eastern Europe. “We’ve seen one advanced [...]