Krugman Wins Nobel Prize, On The Current Turmoil

Paul Krugman, the Princeton University scholar, New York Times columnist and unabashed liberal, won the Nobel prize in economics Monday for his analysis of how economies of scale can affect international trade patterns. Perhaps better known as a columnist than an economist to the public, Krugman has also come out forcefully against John McCain during the economic meltdown, saying the Republican presidential candidate is "more frightening now than he was a few weeks ago." Krugman also has derided the Republicans as becoming "the party of stupid." Not one to tone down his opinions, Krugman has compared the current financial crisis to the devastation of the 1930s.

"We are now witnessing a crisis that is as severe as the crisis that hit Asia in the 90's. This crisis bears some resemblance to the Great Depression," Krugman told reporters Monday. But he was optimistic that a global effort aimed at stemming the financial blood loss had taken root. "I'm slightly less terrified today than I was on Friday," he said, referring to the weekend crisis talks among European leaders that led to the nationalization of British banks, unlimited access to U.S. dollars to banks worldwide and efforts to stave off a global recession.

In contrast to his treatment of U.S. officials, Krugman has praised Britain's financial leaders for their nimble response to the credit crisis. In a column Monday in the New York Times, Krugman wrote 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 at first rejected 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," he wrote. "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."

The Royal Swedish Academy of Sciences praised Krugman for formulating a new theory to answer questions about free trade and said his theory had inspired an enormous field of research. "What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions," the academy said in its citation. "He has thereby integrated the previously disparate research fields of international trade and economic geography," it said.

The award, known as the Nobel Memorial Prize in Economic Sciences, is the last of the six Nobel prizes announced this year and is not one of the original Nobels. It was created in 1968 by the Swedish central bank in Alfred Nobel's memory.

In addition to his work as an economist at Princeton University in New Jersey, where he has been since 2000, Krugman has written for Foreign Affairs, the Harvard Business Review and Scientific American, among other publications.

He graduated with a bachelor's degree from Yale in 1974 and received a Ph.D. from MIT in 1977. Besides teaching at Yale and MIT, he also taught at Stanford.

p/s photos: Aum Patcharapa Chaichua