EASY THERE ECONOMY,...

EASY THERE ECONOMY, EASY... Paul Krugman is in fine form today, letting his inner economist roar forth for a quick lecture on the state of the economy, and why the stock market's drop over the last few days is worrisome. "The rise in stock prices that began last fall," he writes, "was essentially based on the belief that the U.S. economy can defy gravity -- that both individuals and the nation as a whole can spend more than their income, not on a temporary basis, but more or less indefinitely." And then comes the bad news. The dollar's dropped a bit less than 10 percent against the euro and yen in the last month, the housing market is rapidly decelerating, and do we really need to talk gas prices? Consumers have been surprisingly resilient against their rise, but there's evidence that the tipping point is near. Back to Krugman: "We [have become] a nation in which people make a living by selling one another houses, and they pay for the houses with money borrowed from China. Now that game seems to be coming to an end. We're going to have to find other ways to make a living -- in particular, we're going to have to start selling goods and services, not just I.O.U.'s, to the rest of the world, and/or replace imports with domestic production." Think anyone else is in the market for a really big fence?

--Ezra Klein

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