Paul Krugman proposes his economic plan for the US. As he says, it’s not rocket science. He plans to supplement expansionary monetary policy with $100 billion of short-term fiscal stimulus, offset by a scrapping of the long-term tax cuts proposed by Bush.

Given the increasingly alarming parallels with Japan though, it’s worth observing that Japan did much of this. The big problem has been the failure to tackle the corrupt and debt-laden financial system. I’d say the US needs something much the same – a sharp tightening of financial standards and some big bankruptcies among financial institutions – before there will be a sustained recovery.