Nina, here's Kevin Drum's Krugman

Nina, here's Kevin Drum's Krugman interview:

"AN INTERVIEW WITH PAUL KRUGMAN"

Does the U.S. current account deficit end with a bang (Krugman) or a whimper (DeLong)? DeLong reacts to Krugman's Drum interview: "The Endgame for the U.S. Current-Account Deficit".

"...The U.S. current account deficit is unsustainable, and as Herb Stein used to like to say, if things are unsustainable they will stop. I used to think it would stop as demand in the rest of the world grew and demand for U.S. exports grew along with it. That's becoming less and less likely. So I have to agree with Paul that the current-account deficit will end one day when foreigners decide that the U.S. is not a good place to put their money, and the dollar falls in value by somewhere between 25% and 50% in a relatively short period of time. If Bush is reelected and continues his feckless fiscal policies, my bet is that this dollar crisis comes between three and five years from now.

What consequences does such a shift in capital flows and a collapse in the dollar entail? I do find myself much more optimistic than Paul Krugman..."

But take a look at where DeLong sees the big crunch coming.

Daniel Drezer comments on the Drum-Krugman interview, here: "Paul Krugman opens up"

"...I was entranced by the interview's mix of defensible economic critiques and wild-eyed political paranoia (and a hat tip to Drum for doing a great interview)..."