Revenge of the Glut is an article That appears in the New York Times authored by Paul Krugman, a columnist for the New York Times.Krugman seeks to inform the American public as to the other causes besides sub-prime lending that has caused the latest world-wide recession.Krugman argues that trade deficits with Asia by the U.S and other countries are factors in this global meltdown.
Krugman argues that the borrowed money from Asia along with the increase in housing values help created the illusion of wealth. So when sub-prime mortgages began to fail causing the housing bubble to burst. The result was a lost of wealth leaving only huge sums of debt to be paid from borrowing. Consequently, the results of these actions caused a recession in the domestic and global economy effecting industries such as manufacturing. Krugman concludes that we are in a economic mess. Borrowing, a belief in deregulation of capital markets,and the illusion that housing values would only increase is the reason for our calamity. However, the worse is not over. The problem is further compounded by the overall lack of confidence in the economy resulting in the lack of consumer spending, the lack of banks willing to lend, and the lack of business willing to invest. Who knows if of or when we will get out this mess.
