In Los Tiempos de Nueva York, the economist formerly known as Pauly Krugnuts recalls his 2008 warnings that the United States economy would follow the pattern Japan's economy followed during its post-1980s recession. Most of the stimulative nostrums Paul Krugman prescribed back then have since been tried (though he believes the dosages have been too low), and nothing got better.
So without admitting any wrongdoing, Krugman has changed the question. Previously the Nobel laureate claimed that the failure of Tokyo central planners to provide more expensive stimulus caused Japan's recovery to relapse into recession. Now, however, he accepts Japan's two-decade recession as force majeure, and says that D.C. central planners should be acting more like their Tokyo counterparts:
Why not? For all its flaws, Japanese policy limited and contained the damage from a financial bust. And the question in America now is whether we'll do the same — or whether we will take a hard right turn into economic disaster.
In the 1990s, Japan conducted a dress rehearsal for the crisis that struck much of the world in 2008. Runaway banks fueled a bubble in land prices; when the bubble burst, these banks were severely weakened, as were the balance sheets of everyone who had borrowed in the belief that land prices would stay high. The result was protracted economic weakness.
The fable of the near-recovery foiled by insufficient stimulus comes up repeatedly in Krugman's theology. It's his version of Xenu's genocide.
But now Krugman is willing to claim—without evidence—that Japan's feeble stimulus has left that great nation with an economy that is "grayish rather than pitch black," "depressed, but…not in a depression," and "disappointing but not disastrous."
Krugman also notes that while stimulus fails in reality it works in theory: "The government propped up employment with public works programs, but its efforts were never focused enough to start a self-sustaining recovery."
The rest of his column is political speech and unworthy of note. The above is all the intellectual content, and it is very shabby.