Paul Krugman writes:

“Catching up on my Willem Buiter, I find this interesting piece on capital controls in the response to the European crisis, which begins:

When Iceland’s banking system and currency collapsed last September, a key component of the emergency package that was introduced under the auspices of the IMF were controls on capital outflows, implemented through rigorous foreign exchange controls.

I have a bit of personal history here — and it has some bearing on broader economic policy issues right now. Back in 1998, in the midst of the Asian financial crisis, I came out in favor of temporary capital controls; a bit about that here. At the time it was regarded as a horribly unorthodox and irresponsible suggestion — and I had a long, very unpleasant phone conversation with a Senior Administration Official who berated me for my anti-market ideas.

Today, that wild and crazy idea is so orthodox it’s part of standard IMF policy.

There are obvious parallels with the current debate over bank nationalization….”

Paul Krugman’s Conscience of a Liberal Blog, March 2, 2009

Comment:
Run for cover…here it comes