Cold Winds Blowing

Every day brings a fresh batch of news analysis in which everyone from amateur bloggers (mea culpa) to Nobel laureate economists tries to get a bearing on the current economic crisis.

Occasionally one of these pieces will stand out for its sapience, but most are of the “nobody really knows” variety. At least we humans are acknowledging the limits of our ability to control events — or even adequately understand them.

Of today’s selection of crisis pieces, Paul Krugman’s column in The New York Times gets high marks for its plain-spokenness:

If you want to see what it really takes to boot the economy out of a debt trap, look at the large public works program, otherwise known as World War II, that ended the Great Depression. The war didn’t just lead to full employment. It also led to rapidly rising incomes and substantial inflation, all with virtually no borrowing by the private sector. By 1945 the government’s debt had soared, but the ratio of private-sector debt to GDP was only half what it had been in 1940. And this low level of private debt helped set the stage for the great postwar boom.

Since nothing like that is on the table, or seems likely to get on the table any time soon, it will take years for families and firms to work off the debt they ran up so blithely. The odds are that the legacy of our time of illusion — our decade at Bernie’s — will be a long, painful slump.

Krugman’s political biases are no secret, nor is his tendency to polemicize. But when a Nobel economist suggests that only something on the scale of a world war could pull us out of our current malaise, we’ve got reason to worry — or, better, pray.