Obama-nomics: Borrowing and spending so we can borrow and spend more

Der Spiegel's Gabor Steingart has been an apt chronicler of our nation's decline. His series on that very subject, from last year, was dead on. (His pieces on U.S. politics and campaigns, while enjoyable to read, are frequently wrong in their predictions, on the other hand.) He has a new article on our fiscal insanity, a continuation of George W. Bush's nitwit excesses by Obama's overmatched economic team. A particularly choice passage:

The crisis, Summers intoned last week at a conference of Deutsche Bank's Alfred Herrhausen Society in Washington, was caused by too much confidence, too much credit and too many debts. It was hard not to nod along in agreement.

But then Summers added that the way to bring about an end to the crisis was -- more confidence, more credit and more debt. And the nodding stopped. Experts and non-experts alike were perplexed. Even in an interview following the presentation, Summers was unable to supply an adequate explanation for how a crisis caused by frivolous lending was going to be solved through yet more frivolity.

Mind you, this is precisely what Nobel Prize-winner Paul Krugman recommends -- except he recommends even more borrowing and spending:

As for worries about increasing the national debt, Krugman said there's still plenty of room for the United States to borrow without losing the confidence of the financial markets.

"Belgium has debt equal to 87 percent of its gross domestic product," he said. "That's 40 percent higher than ours, with no financial crisis. So we can probably run up another $6 trillion in debt."

Belgium has no financial crisis? That may come as news to Belgium:

Belgium's economy will shrink by 2.5 percent this year and grow by a modest 0.3 percent in 2010 with a steeply rising budget deficit, the International Monetary Fund said on Tuesday.

'With a protracted global financial crisis and recessions in partner countries, GDP growth is expected to contract sharply in 2009 and to recover only sluggishly in 2010, with significant downside risks,' the IMF said in a report.

Paul Krugman is a very smart man, but he's got his blind spots, like the rest of us.