The Return of Depression Economics - Paul Krugman

It's been some time since I've blogged - almost 1 whole month to be exact! It was a combination of factors - being overworked, feeling sick of work, and then being sick of being sick of work and yet being overworked ... haha ... one gets the idea. But the root of it all is that my increasing skepticism of the value of my work (both to myself and if I could, the rest of the world) relative to the amount of time that I'm draining into it was close to smothering out the drive that was sustaining me all these time. I don't think I've actually figured a way out - althouth I've come to know alot of people who haven't either - but I've enough left in me to continue churning out a decent amount of work. The energy that I've conserved - I'm starting to put it to better use :)

But anyway! Ramblings aside! Have just finished reading Krugman's book. He has a knack for making long periods of history and economic intricacies sound short and simple to a layman like me.

Some of the lessons I learnt, apart from how nations' economies crash, many of which would sound like primary school math to those schooled in econs!
(i) The Fed and Alan Greenspan - Greenspan's pursuit of a laissez-faire capitalism, in particular, his reluctance to regulate derivatives, had contributed somewhat to the bubbles that formed during his time. In fact, the stock market bubble may have only been saved by a housing bubble.
(ii) Supply and demand side issues - Krugman made the statement that "for the first time in two generations, failures on the demand side of the economy ... have become the clear and present limitation on prosperity for a large part of the world". As such, we cannot stick to the Bush era tax-cuts-to-promote-production as a means to climb out of the current situation.
(iii) Psychology in economics - That it is difficult to apply the same set of economic principles to all situations without factoring in the human element - which is difficult to predict. There are two aspects that Krugman raised. First is that speculative attacks (such as by hedge funds) can have exceedingly high impacts on a nation's economy. Second is that the level of confidence in a nation's financial market can either spiral its economics into a meltdown or cause nothing more than a benign blip when policies such as the devaluation of its currency is made.