by Calculated Risk on 4/04/2009 07:36:00 PM

“I never imagined that these days I'd get to the epicenter, the place, the heart of the problem, by a commuter train on New Jersey Transit. But here it is. It's the crisis of our lifetime.”
Paul Krugman, April 3, 2009

From the Desert Sun: Nobel Prize winner Krugman shares harsh view on economic woes (ht Jonathan)

... "This is terrifying,” [Paul Krugman] said. “I did not imagine in my worst expectations that this would be this hard. I thought that we could sit down and sketch out the kinds of things, in principle, you could do to offset this type of global slump. But I never thought it would be this hard, in practice, to implement.”
...
Krugman said, the lesson from Japan is that countries facing a similar fate should be “very aggressive and cut interest rates early.”

And though the United States did - “unfortunately, it didn't turn out to be enough,” he said.

“Once you're in a world where there's just not enough demand out there and you're cutting interest rates down to zero, then you're in a world where the rules of economics go into reverse - much like ‘Alice in Wonderland,'” he said.

Jon Lansner at the O.C. Register has more: Krugman: ‘Maybe we need a new bubble to invest in!’ (excerpts from a Twitter transcript)

How did this happen? We forgot the Great Depression! We exposed ourselves 2 a repeat. May not be a repeat BUT close.

Debt levels before this crash approached pre-Depression levels. And we had “the mother of all housing bubbles.”

By one professor’s math interest rates should be at minus-8% based on the economy’s plight

Big banks are in trouble. Some insolvent. “Socialist” bank seizures in US every week. But giant holding companies?

Are we doing enough? If you think this ends soon, then “Yes!” But if this runs on then “No!” This looks inadequate.

Stock rally on good news? Not good news just things not getting much worse!

We are not clueless. We have not done enough. I am terrified. Hope we find the audacity to fix it.