Latest Krugman - Are We On The Verge Of A Liquidity Trap?

New York Times - Fear of a Quaqmire -- Our own situation is strikingly similar in some ways to that of Japan a decade ago. Like Japan circa 1993 or 1994, the United States is now facing the aftermath of a huge stock market bubble — the Nikkei and the Standard and Poor's 500 both tripled in the five years before their respective peaks.

Also like Japan, we face a problem not of sharp downturn but of persistent underperformance — an economy that grows, but too slowly to prevent rising unemployment and falling capacity utilization.

What's different is that we have Japan as a cautionary example. Is forewarned forearmed?

Aren't the tax cuts in the pipeline exactly what the economy needs? Alas, no. Despite their huge size — if you ignore the gimmicks, the latest round will cost at least $800 billion over the next decade — they pump relatively little money into the economy now, when it needs it. Moreover, the tax cuts flow mainly to the very, very affluent — the people least likely to spend their windfall.