My Economic Plan
By PAUL KRUGMAN

Although other news has been drowned out by the barking of the dogs of war, something ominous is happening on the economic front. It's not dramatic, but month by month the numbers keep coming in worse than expected. Let's put politics completely aside for once, and review where we are and what should be done.

The key point is that this isn't your father's recession — it's your grandfather's recession. That is, it isn't your standard postwar recession, engineered by the Federal Reserve to fight inflation, and easily reversed when the Fed loosens the reins. It's a classic overinvestment slump, of a kind that was normal before World War II. And such slumps have always been hard to fight simply by cutting interest rates. [read more]