Assignment #6 T.Sewell

The article “Revenge of the Glut” was written by Paul Krugman and published in the New York Times on March 1, 2009. Mr. Krugman is explaining the situation of the United States economy to everyone affected by our economy. The basis of his opinion is a speech given by Ben Bernanke, the Federal Reserve Chairman in 2005. Mr. Bernanke explains that in the wake of Asia’s financial crisis in 1997-1998, Asia has been heavily investing in other country’s markets, including Iceland, Ireland, Estonia, and the United States. The large amounts of money they poured into foreign markets caused trade deficits. Mr. Krugman further explains that the economies of these countries have collapsed, their assets have evaporated but their debts are still real. Now, with everything collapsing, people are holding onto every penny they can get and making things worse by saving instead of reinvesting. Now we have a “global slump” and are still looking for a way out.