06/24/2011 06:33 pm ET Updated Aug 24, 2011

Why The Busts Keep Getting Bigger: Krugman

Suppose we describe the following situation: major US financial institutions have badly overreached. They created and sold new financial instruments without understanding the risk. They poured money into dubious loans in pursuit of short-term profits, dismissing clear warnings that the borrowers might not be able to repay those loans.

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