Get ready for it: Another economic collapse is coming.

[ProSense]

13. Right

Krugman himself admits that a major European crisis would cause major disruption with unforseeable consequences, "...if European events cause a Lehman-type event, disrupting financial markets world-wide, all bets are off."

And though Dean Baker may be convinced that the collapse of the Eurozone is unlikely, I disagree. The EU doesn't have the kind of institutional structure that the US does. If Nevada gets into financial trouble, the other 49 states pick up the slack under the guidance of the Federal government. The EU constitution doesn't have a similar provision. Greece is still sovereign, and Angela Merkel And Nicholas Sarkozy can't force the Greek government to defy the will of the Greek people forever. If there is a revolution in Greece, which looks increasingly likely as harsh austerity measures are imposed, then I agree with Krugman that all bets are off.

And though I respect the opinions of both men, I would remind you that the majority of economists (though not these two) didn't see the handwriting on the wall before the last crisis.

...but what constitutes "major European crisis"? When all the talk about Greece's impending doom was at its height and parallels were being drawn, Krugman made the case that the U.S. is not Greece. Does anyone foresee a "Lehman-type event"? That was the basis for a lot of the past predictions of doom. In fact, some went so far to say Wall Street reform wouldn't prevent it. I disagree. The FDIC has its new powers and the Volcker rule takes effect in July. Whatever financial crisis awaits in the future, it will not be similar to the last one, and it will not happen anytime soon.