On March 1st, 2009, in the Opinion section of the New York Times, the article Revenge of the Glut was published. The article was written by Paul Krugman. Krugman has taught at widely known schools such as Yale, MIT and Stanford. Krugman has received degrees from Yale and MIT.
As more time passes on people are asking more about how America got into such a bad situation. This article helps explain how the economy got into the situation it is in. Another topic in the article is how the economy works. In the beginning of the article it explains how the house loans were only a small problem to start with but along with other problems have lead to debt crisis. Into the article Krugman explains how a speech four years ago by Ben Bernanke can be linked to America today. Ben Bernanke is the Federal Reserve chairman. Mr. Bernanke cited “the depth and sophistication of the country’s financial markets (which, among other things, have allowed households easy access to housing wealth).” Krugman explains in the article that this was the revenge of glut.
America has put a good bit of money into other countries but little flow of money is being returned into America. America was more focused on money going to other countries it was too late by the time America realized there was not enough coming back. America bankers ran the world by finding certain ways to enrich themselves. By enriching themselves they were hiding risk and fooling investors. Assets prices were rising, and money was strong and everything was looking fine. Until those investors knew things were wrong but continued till it was kind of too late. As the author states “bubbles always burst sooner or later.” Those asset prices that was rising vanished leaving nothing but debt and a crisis. It’s not like America has only had a crisis like this many countries have. Like any person goes through a rough time so do countries. If Asia made it through a rough time for a year then America should be able to. It’s not understood how much time America needs but the author makes a point we can do it like others. At the end of the article the author states “global paradox of thrift: around the world, desired saving exceeds the amount businesses are willing to invest.” The result in this glut is the global slump American and some other countries are in.
The audience of this article is geared toward anyone who cares and wants to understand why America is in this glut. As stated before this article was in the Opinion section of the New York Times. Krugman wrote this article to express his feelings toward American and the global slump it is in. Krugman also wrote this article to help people understand his feelings and the global slump of America. The overall argument of the article is that America is not the only countries to be in a slump and how it happens and how countries can get out the global slump.
