In an Oct. 12 article on the New York Times’ Web site, Krugman wrote about the global financial meltdown and its reach into Europe, saying that British Prime Minister Gordon Brown and Chancellor Alistair Darling “defined the character of the worldwide rescue effort, with other wealthy nations playing catch-up.”
Whereas U.S. Treasury Secretary Henry Paulson rejected a “sort of temporary part-nationalization” involving governments giving financial institutions more money in return for a share of ownership, the British government “went straight to the heart of the problem … with stunning speed.”
Krugman said the major European economies have “in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts.”
“And whaddya know,” Krugman continued, “Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities.”
