The article “Revenge of the Glut” was written by Paul Krugman, a New York Times columnist and professor of economics and international affairs at Princeton University. Krugman received his BA from Yale and his PhD from the Massachusetts Institute of Technology. He has written or edited many books and more than 200 professional papers. In 2008 he was awarded the Nobel Prize in Economics. The article appeared in the New York Times on March 2nd 2009. The NY Times is a liberal leaning, nationally distributed, daily newspaper. “Revenge of the Glut” appeared on the Op-Ed Page.
The article was written for American citizens who are interested in the origins of the economic crisis, as well as for scholars and politicians. The author wants to inform the readers about his opinion on how the crisis started and why it is so widespread. His main point is that after the Asian financial crisis Asian countries started buying foreign assets which caused huge capital inflows to the US, as well as to some smaller European economies. Most money flowed to the US however, due to deregulation allowing American bankers to hide risks and fool investors. This led to an illusion of wealth in America and in countries such as Iceland, Ireland and Estonia. When the bubble burst, as all bubbles will eventually, assets were lost, but the debt remained. The housing bubble burst took place mainly on the coast; yet demand for manufactured goods plummeted, spreading the crisis all across the country and the world. At the moment, people are unwilling to invest and reluctant to buy. A solution to the problem has still not been found.
