Paul Krugman on China

149.

April 03, 2009 12:34 pm

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As it looks now, the present crisis took place because of the banks and quasi bank in the financial "industry." Those institution and the Fed in the current system probably outlived their efficient function already long time before the crisis. A radical change in the banking system requires non conventional thinking, a difficult commodity to put into practice, because most economic leaders and the bankers belong to the same community which shares common business thinking. The immediate danger is that the banks, because of their function in channeling capital to business in general, will drag along the whole world economy.

China, like all other major economies, is in difficulties, among other things because of it dependence as a producer and lender to the United Stated. The Chinese were successful in the twentieth century because of their flexibility in adaptation to world economy within very different political regime. If I have to chose between the belief of President Obama in the Geithner plan and the hope of the leaders of China to contribute to economic solution of the crisis, I will choose the Chinese.

— Aharon Meytahl, Vestal, New York