Nomad:

On the fiscal side, the comparison with the United States is striking. Many economists, myself included, have argued that the Obama administration's stimulus plan is too small, given the depth of the crisis. But America's actions dwarf anything the Europeans are doing.

On this one I am not sure. Krugman seems to want to compare the EU to the US and EU member states to US states. On fiscal policy, that's just wrong. The EU budget is 1% of GDP and it doesn't raise its own taxes. EU member states raise their own taxes and have independent fiscal policies (subject to the Growth and Stability Pact - but that was "relaxed" in November). US states at most collect sales taxes at a rate about 1/2 of EU VAT. Nomad:

The difference in monetary policy is equally striking. The European Central Bank has been far less proactive than the Federal Reserve; it has been slow to cut interest rates (it actually raised rates last July), and it has shied away from any strong measures to unfreeze credit markets.

On the other hand, the ECB was a lot more proactive (and derided for it) than the US Fed and the Bank of England in the second half of 2007. European governments have been bailing out banks like the US has. I am not convinced that the EU interest rate needs to be nearly zero as the US one, but if it needs to, we still have room to move it there. The US has hit the "zero lower bound".Nomad:

The only thing working in Europe's favor is the very thing for which it takes the most criticism -- the size and generosity of its welfare states, which are cushioning the impact of the economic slump.

We still have idiots like Aznar and other EPP leaders advocating social cuts to balance budgets. But at least we have a generous welfare state.

I don't like what I read from Krugman about the EU, I think he doesn't understand it. But maybe I'm the one who doesn't understand the EU. He's the Bank-of-Sweden-Prize economist.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith