as I recall and is still clinging to the "free trade" bandwagon.

Where the theory really falls apart...trading people. These people seriously believe that trading people is great and we should have corporate controlled global migration and that will all be "good"...., uh no, That represses wages incredibly so, causes dramatic changes in domestic population, which puts massive burdens on some nations social infrastructure and others with a sudden labor shortage....I mean by the equations, by the theory itself, at least in terms of middle classes the theory shows this will lead to a "slave" class.

I don't find anything too Progressive on that score.

I actually heard a Harvard economist try to claim offshore outsourcing was "good" because it gave our jobs to other nations. It was pathetic. It's almost like one can put a quarter into these people and have them play the corporate talking points tape and damn any statistics, anything at all that shows the contrary is going on.

I do agree with you that Krugman has been sounding more and more circumspect these days, looking at real evidence in the real world...

But I fear people are putting him on the level of "God" and one needs to examine someone's track record instead of personality.

Prof. Krugman, despite his ties to the Peterson Institute and the Group of Thirty, is beginning to make more and more sense (remember, he was a big supporter of jobs offshoring!).

Securitization (transforming debt into securities) is responsible for the super- or ultra-leveraging, with the subsequent de-leveraging we'll be sadly experiencing for many years to come. Fraud by any other name, is still fraud.

One could accept the mini-fraud of fractional reserve banking, but as with all frauds, it was taken to the ultimate extreme, thus as that many others have stated, we end up with the "shadow banking system" leading to the predictable demise of capitalism.

It's been a great wealth-transfer to the super-rich with the all-too-obvious leveraged buyout of America, but perhaps the citizenry will awaken before all is lost......

Same old thinking on the part of the Obama Administration. I expected more creative thinking. We are they going to recognize that we have an opportunity to establish a manufacturing strategy and totally transform manufacturing in this country. But we get the same race to the bottom crap that I would expect from an repuglican administration.

despite the mightiest efforts by governments to the contrary. The only question is, how drastic and disorderly the debt reduction will be.

Bush/Paulson, and now Obama/Geithner, have focused solely on supply issues (getting banks to lend), and have totally ignored demand issues (consumers are so indebted that we need them to borrow less and save more). Taking care of that demand issue means shifting society's favor from plutocrats to the average citizen. As we are seeing, that is not happening even under an allegedly liberal Administration.

India is a mess. It's that simple, but it's also quite complicated. I'll start with what I think are India's four major problems--the four most preventing India from becoming a developing nation--and then move to some of the ancillary ones.

First, pollution. In my opinion the filth, squalor and all around pollution indicates a marked lack of respect for India by Indians. I don't know how cultural the filth is, but it's really beyond anything I have ever encountered. At times the smells, trash, refuse and excrement are like a garbage dump. Right next door to the Taj Mahal was a pile of trash that smelled so bad, was so foul as to almost ruin the entire Taj experience. Delhi, Bangalore and Chennai to a lesser degree were so very polluted as to make me physically ill. Sinus infections, ear infection, bowels churning was an all to common experience in India. Dung, be it goat, cow or human fecal matter was common on the streets. In major tourist areas filth was everywhere, littering the sidewalks, the roadways, you name it. Toilets in the middle of the road, men urinating and defecating anywhere, in broad daylight. Whole villages are plastic bag wastelands. Roadsides are choked by it. Air quality that can hardly be called quality. Far too much coal and far to few unleaded vehicles on the road. The measure should be how dangerous the air is for one's health, not how good it is. People casually throw trash in the streets, on the roads. The only two cities that could be considered sanitary in my journey were Trivandrum--the capital of Kerala--and Calicut. I don't know why this is. But I can assure you that at some point this pollution will cut into India's productivity, if it already hasn't. The pollution will hobble India's growth path, if that indeed is what the country wants. (Which I personally doubt, as India is far too conservative a country, in the small 'c' sense.)

More after the jump.

The second issue, infrastructure, can be divided into four subcategories: roads, rails and ports and the electrical grid. The electrical grid is a joke. Load shedding is all too common, everywhere in India. Wide swaths of the country spend much of the day without the electricity they actually pay for. With out regular electricity, productivity, again, falls. The ports are a joke. Antiquated, out of date, hardly even appropriate for the mechanized world of container ports, more in line with the days of longshoremen and the like. Roads are an equal disaster. I only saw one elevated highway that would be considered decent in Thailand, much less Western Europe or America. And I covered fully two thirds of the country during my visit. There are so few dual carriage way roads as to be laughable. There are no traffic laws to speak of, and if there are, they are rarely obeyed, much less enforced. A drive that should take an hour takes three. A drive that should take three takes nine. The buses are at least thirty years old, if not older. Everyone in India, or who travels in India raves about the railway system. Rubbish. It's awful. Now, when I was there in 2003 and then late 2004 it was decent. But in the last five years the traffic on the rails has grown so quickly that once again, it is threatening productivity. Waiting in line just to ask a question now takes thirty minutes. Routes are routinely sold out three and four days in advance now, leaving travelers stranded with little option except to take the decrepit and dangerous buses. At least fifty million people use the trains a day in India. 50 million people! Not surprising that waitlists of 500 or more people are common now. The rails are affordable and comprehensive but they are overcrowded and what with budget airlines popping up in India like Sadhus in an ashram the middle and lowers classes are left to deal with the overutilized rails and quality suffers. No one seems to give a shit. Seriously, I just never have the impression that the Indian government really cares. Too interested in buying weapons from Russia, Israel and the US I guess.

The last major problem in India is an old problem and can be divided into two parts that've been two sides of the same coin since government was invented: bureaucracy and corruption. It take triplicates to register into a hotel. To get a SIM card for one's phone is like wading into a jungle of red-tape and photocopies one is not likely to emerge from in a good mood, much less satisfied with customer service. Getting train tickets is a terrible ordeal, first you have to find the train number, which takes 30 minutes, then you have to fill in the form, which is far from easy, then you have to wait in line to try and make a reservation, which takes 30 minutes at least and if you made a single mistake on the form back you go to the end of the queue, or what passes for a queue in India. The government is notoriously uninterested in the problems of the commoners, too busy fleecing the rich, or trying to get rich themselves in some way shape or form. Take the trash for example, civil rubbish collection authorities are too busy taking kickbacks from the wealthy to keep their areas clean that they don't have the time, manpower, money or interest in doing their job. Rural hospitals are perennially understaffed as doctors pocket the fees the government pays them, never show up at the rural hospitals and practice in the cities instead.

I could go on for quite some time about my perception of India and its problems, but in all seriousness, I don't think anyone in India really cares. And that, to me, is the biggest problem. India is too conservative a society to want to change in any way. Mumbai, India's financial capital is about as filthy, polluted and poor as the worst city imaginable in Vietnam, or Indonesia--and being more polluted than Medan, in Sumatra is no easy task. The biggest rats I have ever seen were in Medan!

One would expect a certain amount of, yes, I am going to use this word, backwardness, in a country that hasn't produced so many Nobel Laureates, nuclear physicists, imminent economists and entrepreneurs. But India has all these things and what have they brought back to India with them? Nothing. The rich still have their servants, the lower castes are still there to do the dirty work and so the country remains in stasis. It's a shame. Indians and India have many wonderful things to offer the world, but I'm far from sanguine that India will amount to much in my lifetime.

Now, have at it, call me a cultural imperialist, a spoiled child of the West and all that. But remember, I've been there. I've done it. And I've seen 50 other countries on this planet and none, not even Ethiopia, have as long and gargantuan a laundry list of problems as India does. And the bottom line is, I don't think India really cares.

They are gambling with tax payers fund. They have nothing to lose. If they lose, they will be bailed out anyway. If they win big, then they hope to get of this mess and pay the handsome rewards to the traders who bet this right, and label this as "retaining the talents" that create the shareholder vlaue

I read some stuff at www.chinaeconomicscan.com the other day that's interesting in the context of this article, I mean sure time has passed, but seeing the current state of things and recent developments... the china-US relationship is fascinating, very symbiotic in terms of trade and investment, yet very tense in light of the economic and political dialect...

I don't know where this idea that securitization is dead is coming from, especially from the Obama administration.

From what I can tell it's the ultimate "Zombie" eating away at this point the U.S. economy to the point of the ultimate risk.

The way I read this argument, although Krugman doesn't imply it, is securitization as it's currently implemented caused fictional money, more risk, bloat in the financial sector.

So much is based on flawed models, such as the tranches which were steaming piles of shit layered with AAA rated securities to cover up the stink.

So, the concepts might be ok, but when implemented on flawed models, clearly fictional mathematics which doesn't even pass the smell test and as you point out, the big kauna of 40:1 leveraging...

yeah, that all should die, but right now it seems the zombie oligarchs are brazenly winning.

They made a study in which - they made an assumption that if a person with a foreign sounding name (non caucasian sounding) that applied for a patent that he/she is a foreigner and not American. Hello, there are Chinese Americans and Indian Americans. One of the civil liberties group's should have sued them.
The other day there was this professor from Harvard on Lou Dobbs' show defending free trade. With the mess we are in and with millions of Americans unemployed; free trade is still the best for this professor. Maybe they don't teach common sense in Harvard.