Paul Krugman, "Death of a Fairy Tale": Krugman Spins an Alternate Fable

In his latest New York Times op-ed, "Death of a Fairy Tale" (http://www.nytimes.com/2012/04/27/opinion/krugman-death-of-a-fairy-tale.html), Paul Krugman again bashes those who sought to reduce government spending and balance budgets during an economic downturn. Krugman writes:

"For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets."

Krugman focuses his text on Europe, i.e. the UK, France, Holland and Greece, whose economies remain dismal.

But Krugman avoids examining the US effort at stimulating the economy. Obama's stimulus plan has thus far cost some $825 billion, and when it was initiated in 2009, Americans were told that unemployment would decline to 6%. Instead, the Congressional Budget Office is now predicting that unemployment will remain over 8% until 2014.

Yeah, I know, Krugman would have spent more.

Bottom line: Maybe this time around, both austerity and spending aren't working. Perhaps the global economy, which, by its seasonal nature, must have its ups and downs, will run its own course and is not always susceptible to engineering.